Category: Finance

American Airlines AAdvantage is one of the best travel loyalty programs around. If you regularly fly with American Airlines or any of its oneworld alliance partner airlines, AAdvantage miles can help you save real money on your next vacation or business trip.

You must earn those miles first, of course. Fortunately, with so many ways to accumulate American Airlines AAdvantage miles — from opening a Bask Mileage Savings Account to booking a vacation package through American Airlines Vacations — building your mileage balance is easier than you might think.

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11 Ways Earn American Airlines (AAdvantage) Miles

You can earn American Airlines miles using any of the methods described below — or all of them. Just know that only one option, opening a Bask Mileage Savings Account and making your initial deposit, doesn’t require any spending.  

You’ll probably want to experiment with other mileage-earning options though. After all, the more miles you earn, the sooner you can take advantage of free or reduced-price American Airlines flights, fare class upgrades, and other choice perks and benefits.

1. Join the American Airlines AAdvantage Program

First things first. To earn American Airlines AAdvantage miles, you need to become a member of the American Airlines AAdvantage® program.

Use the AAdvantage enrollment page to create your AAdvantage account and get your unique AAdvantage number. Just enter some basic personal information, including your name, birthdate, and address, and create a strong account password that you don’t use anywhere else.

It takes just a few minutes to join. Once you’re an AAdvantage member, you can earn miles using any of the methods described here. 

Accumulate enough miles and you may be able to redeem free or reduced-price American Airlines flights (less government taxes and fees) or fare class upgrades to main cabin, business class, or first class. If you travel often enough, you may also ascend the ranks of elite status, earning increasingly valuable perks along the way.

2. Purchase Qualifying Airfare and Complete Your Journey

You can earn American Airlines miles as an AAdvantage member when you purchase qualifying airfare with American Airlines or any American Airlines partner airline. 

Earning Miles on American Airlines Flights

On American Airlines flights, you’ll earn miles based on your AAdvantage membership level:

Membership Level	Points Earned Per Fare Dollar
General member (no elite status)	5
Gold	7
Platinum	8
Platinum Pro	9
Executive	11

Here’s a simple example. 

As a general AAdvantage member, you’d earn 1,000 AAdvantage miles on a $200 fare: 200 * 5 = 1,000

As an Executive AAdvantage member, you’d earn 2,200 miles on a $200 fare: 200 * 11 =  2,200

Clearly, elite status pays.

Earning Miles on Partner Airline Flights

American Airlines partners with more than 20 oneworld partner airlines. Notables include:

• British Airways
• Alaska Airlines
• Iberia
• Japan Airlines
• Qatar Airways
• Cathay Pacific
• Qantas

On partner flights, you may earn miles based on the number of miles flown rather than the dollar cost of your fare. You may also earn a “cabin bonus” if you’re flying main cabin, business, or first class. Earn rates and cabin bonuses vary by partner, so check American Airlines’ partner page for information about the airlines you plan to fly with.

Whoever you fly with, miles post to your account in the weeks after you complete your journey. Don’t expect to see them the moment you touch down.

3. Stay at Partner Hotels

You can also earn American Airlines AAdvantage miles on qualifying hotel stays at about 500,000 partner hotels worldwide. Notable American airlines hotel partners include:

Partner Hotel Group	Earn Rate
Hyatt Hotels & Resorts	500 miles per stay
Marriott International (Marriott Bonvoy)	Up to 2 miles per $1 spent on qualifying charges
InterContinental Hotels and Resorts	Up to 2 miles per $1 spent on qualifying charges

Just provide your AAdvantage member number when you book or check in at a partner hotel. Make sure you specify “miles” as your preferred reward method and American Airlines as your preferred airline. Otherwise, your earning path may default to hotel points.

4. Use Partner Rental Car Companies

You can earn AAdvantage miles on car rentals with American Airlines rental car partners, including Hertz and Avis. 

Some rental car companies offer a flat number of miles per reservation. For example, Avis, Budget, and Payless deliver 500 base miles every time you rent with them.

Other companies offer miles by the day or dollar. For example, rentals with Alamo, National, and Dollar earn 50 miles per day. Hertz rentals earn 1 base mile per 1 dollar spent.

5. Open an American Airlines Credit Card

If you have good credit, you may qualify for an American Airlines co-branded credit card. 

There are several to choose from, all issued by major financial institutions like Citi, American Express, and Barclays. Some earn their place among the best credit cards for frequent travelers thanks to impressive welcome bonuses, attractive earning rates on American Airlines purchases, and potentially valuable perks like additional bonus points on car rentals.

Most co-branded American Airlines rewards credit cards have annual fees, with the American Airlines AAdvantage Mileup Mastercard being a notable exception. An annual fee isn’t a dealbreaker if you can earn enough miles to offset it, but it’s something to keep in mind if you’re a less frequent traveler.

6. Take Advantage of Credit Card Bonus Categories

Co-branded American Airlines credit cards don’t only earn miles on American Airlines purchases. Depending on the card, you might also enjoy higher earning rates on everyday purchases at gas stations, grocery stores, and restaurants. 

The more you spend, the more extra miles you could earn.

Before you apply, think about your spending habits. What nontravel purchases do you spend the most on in a typical month or year? Then, take a look at your co-branded American Airlines card options and choose the product that best aligns.

7. Transfer Miles From Another Credit Card

Don’t want to apply for a co-branded American Airlines credit card right now? You might be able to convert credit card points or miles from an existing credit card into AAdvantage miles.

This strategy works best if you have a travel rewards credit card with a generous rewards transfer program. 

For example, Chase credit cards like the Chase Sapphire Preferred Card and Chase Sapphire Reserve card let you transfer Chase Ultimate Rewards points to more than a dozen travel partners at a 1-to-1 ratio. Those partners include British Airways, a oneworld alliance member, although not American Airlines itself.

Still, converting and transferring miles from other credit cards can boost the value of bonus points earned on purchases with those cards. It’s yet another way to earn American Airlines miles without booking a flight.

8. Open a Bask Mileage Savings Account with Bask Bank

Forget earning American Airlines miles by booking a flight. Earn American Airlines miles by saving. With a Bask Mileage Savings Account*, you can earn AAdvantage bonus miles without spending any money at all or dinging your credit by applying for a new credit card. 

How much can you earn? After a recent 20 percent increase in miles per dollar saved, every $1 deposited in your Bask Mileage Savings Account earns 1.2 American Airlines Aadvantage® miles each year. That’s 60,000 Aadvantage miles per year on an initial deposit of $50,000. 

Miles earned through Bask Bank don’t always count toward AAdvantage elite status. But, you can redeem them for award flights, fare upgrades, and purchases with American Airlines’ hotel and rental car partners too. Get rewarded for doing something you probably do anyway — putting away a portion of your paycheck for a rainy day.  

It gets better. When you open a qualifying Bask Mileage Savings Account between Sept. 15 and Dec. 15, 2022, and then deposit at least $25,000 in new money, you can earn 5,000 AAdvantage loyalty points that do count toward elite status through the Bask Loyalty Point Offer. Read the full terms here.

You just have to keep your $25,000 deposit in the account for at least 90 consecutive days. And you can qualify for this bonus while still earning 1.2 miles for every $1 saved.

The only account on this list that allows you to earn mileage without spending money and saving instead is a Bask Mileage Savings Account.

 Here’s how to qualify for the Loyalty Points Offer: 

1. You must be a first time Bask Mileage Savings Account customer and successfully open an account during the offer period.
2. Fund the account $25,000 within 15 calendar days following initial account opening.
3. Maintain a $25,000 minimum daily account balance for 90 consecutive days out of the first 105 days following the initial account opening.
4. Provide Bask Bank with an AAdvantage® account number in the same name as the subject Bask Mileage Savings Account.

Do this and you’re set up to passively earn AAdvantage miles as long as your account is open and in good stead In addition, miles are compounded daily and awarded monthly. 

That’s not to say you should stop there. You can also open a Bask Interest Savings Account* at the same time as one Bask Mileage Savings Account! If you can’t decide between earning interest or miles, then why not do both? It’s easy to transfer funds between your accounts.

*Bask Bank is a division of Texas Capital Bank, Member FDIC. The sum of your total deposits with (i) Bask Bank; (ii) Texas Capital Bank; and (iii) any other division of Texas Capital Bank are insured up to $250,000. Additional coverage may be available depending on how your assets are held.

9. Book Through American Airlines Vacations

Planning an all-inclusive getaway to the Caribbean? An epic jaunt through Europe? Book your next big adventure through American Airlines Vacations and you could earn a healthy AAdvantage miles bonus for your troubles.

Bonus opportunities vary by package. For example, select Marriott Resorts Caribbean getaways earn 15,000 bonus miles, while select Sandals and Beaches Resorts vacation packages earn 25,000 bonus miles. And on top of bonus AAdvantage miles when you book, you could qualify for discounted room rates and other perks.

10. Shop Through the AAdvantage eShopping Mall

As an AAdvantage member, you can earn bonus miles with more than 1,200 American Airlines partner retailers. Notable partners include:

• Apple
• The Home Depot
• CVS Pharmacy
• Macy’s
• Kohl’s
• Disney
• Nike
• Backcountry

Your hub for bonus miles and other potentially valuable promotions is the AAdvantage eShopping Mall, an online shopping portal that makes it easy to connect with your favorite brands without leaving your home.

Earn rates vary by brand but can be generous. Look for the “extra miles” label for opportunities to earn as many as 5 AAdvantage miles per $1 spent on eligible purchases.

11. Join American Airlines AAdvantage Dining

Love dining out as much as you love traveling? 

Join the American Airlines AAdvantage Dining program to earn bonus miles when you dine at participating restaurants and pay with your linked credit or debit card. Every eligible dollar spent earns miles, and you can earn 1,000 bonus miles after you spend at least $25 in your first 30 days in the program.

Just enter your ZIP code in the AAdvantage Dining search feature to find participating restaurants in your area.

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Final Word

There’s only one way on this list to earn American Airlines miles without any new spending: open a Bask Mileage Savings Account, make your first deposit, and reap the rewards. 

When you go through a divorce, it’s common to feel relieved a dysfunctional relationship is ending. But if your ex was the primary breadwinner, it’s also normal to be concerned about supporting yourself without their income — or about having to pay alimony to a lower-earning spouse.

But alimony isn’t a given during divorce. No matter how much you protect your finances before a divorce, you can’t force a court to award or not award alimony. The law governs that aspect. But if you understand what it is and how it works, you can at least predict whether it will be part of your divorce settlement.  

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What Is Alimony?

Alimony is money one spouse pays to another during or after a divorce. The receiving spouse typically earned less money than the paying spouse during the marriage. Alimony is also known as spousal support or spousal maintenance. 

The goal of alimony is to allow the lower-earning spouse to maintain the standard of living they had during the marriage after the divorce. Its existence is based on the theory that one spouse had to give up things to make the marriage work, which puts them at a financial disadvantage. 

Historically, women gave up years of their lives caring for their husbands and children (and later also may have given up lucrative careers and the raises that come with years of experience to do so). Alimony was an acknowledgment they did their part to achieve that standard of living and deserve to keep it.

These days, spousal maintenance is gender-neutral. Whichever spouse earned more during the marriage might pay alimony to support their ex after divorce. For example, singer and TV host Kelly Clarkson pays alimony to her non-famous (and lower-earning) ex-husband.

Also note that just as each state has its own rules governing marriage and divorce, alimony rules also differ. Some states make alimony an uncommon part of divorce, while others do not. 

Each state uses different criteria, with some allowing the court to consider the couple’s standard of living and fault and others not. A few states, such as Texas, are notoriously difficult to get alimony in. 

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How Alimony Works

In many cases, alimony is court-ordered, though you and your ex can work out what’s called “contractual alimony” between yourselves. If the court determines one partner needs alimony, it sets the amount and determines how long the alimony will last.

The court also determines the payment terms, including acceptable payment methods and deadlines. Failure to pay court-ordered alimony can result in criminal or civil charges. 

But alimony isn’t a given just because you make less, and how much you pay or receive depends on state law, not on how much the payee thinks they need.  

Who Gets Alimony

On the surface, alimony looks simple. It’s money paid from one spouse to another after a marriage ends. Generally, the spouse who receives alimony must be significantly less able to provide for themselves at a similar standard of living as when they were married. Having kids isn’t a requirement for alimony, either. Child support is a separate payment. 

But that’s where the simplicity ends. If you dig deeper, you realize alimony isn’t so cut and dried. Judges often award alimony to spouses who were financially dependent on their exes, but what “financially dependent” means varies by state and the judge’s opinion. 

Courts use several factors when deciding who gets alimony and how much. Some factors are objective, while others are subjective, which explains why you sometimes hear stories of wealthy spouses landing substantial alimony payments from their exes or cash-strapped former stay-at-home spouses who get denied alimony. 

But there’s one factor that’s a must-have when deciding who gets alimony: being married. If you’re cohabiting with a partner and you break up, neither one of you has to pay alimony unless you have a written agreement stating that one will support the other financially after a breakup. That’s called “palimony,” and it’s not legal in every state.

A prenuptial agreement can also outline whether one spouse must pay alimony if the marriage dissolves and under what circumstances. 

Your behavior before the divorce also affects your eligibility for alimony. For example, if a spouse can prove the other cheated, the cheating spouse may not get alimony in states that allow for at-fault divorces (which just means the state allows for one person to be blamed for the breakup). Other bad behavior during the marriage, such as drug use, can also make a spouse ineligible for alimony. 

A spouse can get alimony after the divorce is final, even if they didn’t pursue it during the initial proceedings. But they must go back to court to demonstrate they need financial support, which can be tricky to do and might not be possible in all states. Also, the spouse must demonstrate a life change they couldn’t have anticipated during the divorce proceedings.

Once one spouse gets alimony, it usually doesn’t last forever. Death or remarriage brings it to an end. The court can also decide that alimony is no longer necessary, such as when the receiving spouse lands a job that allows them to be financially independent. 

How Alimony Is Calculated

Alimony calculations vary by state and divorce case. Marriage length, income, assets, and earnings potential can play a role in the calculation. 

Some states, like New York, use a mathematical formula to determine an alimony award. The formula uses each partner’s income to decide how much the payer needs to give the receiving spouse. Even with the formula, judges have some leeway when determining the total amount of support.

A family court judge or mediator examines several aspects of a married couple’s relationship and financial situation to decide who gets alimony, how much, and for how long. The aspects they examine include:

• The Length of the Marriage. Often, the longer a couple has been married, the more likely one partner is to receive alimony. In some states, marriage length determines how long it lasts. For example, in Massachusetts, a court can only require alimony payments for up to 50% of the length of a marriage lasting less than five years. The percentage increases the longer a couple is married.
• The Spouses’ Earning Power. Judges examine how much the receiving spouse can potentially earn when deciding whether and how much the payer needs to contribute for support. Spouses that earn substantially more than their exes often have to pay alimony, but the judge also considers the earnings potential of the lower earner. For example, say both spouses are surgeons, but only one worked for pay outside the home during the marriage. The stay-at-home spouse can earn a high salary if they start working as a surgeon again, which affects their ability to receive alimony.
• Each Spouse’s Assets and Debts. If one spouse has a lot more property than the other, the spouse with fewer assets or more debts can get alimony, particularly if they can’t meet their needs on their own. Those assets and debts may change the amount of alimony calculated. 
• Monthly Expenses and Standard of Living. The couple’s standard of living during marriage and their expected monthly expenses also determine the amount of alimony paid. It can be a subjective measure, but generally, a court will give alimony to a spouse to allow them to live as they’re used to living, even after divorce.
• The Spouse’s Ability to Pay Alimony. Whether one spouse can afford to pay alimony also plays a part.
• The Length of Time and Training an Ex Needs to Be Self-Sufficient. If one spouse didn’t work outside the home or left a paying position to care for children or the home, they might need time to finish a degree or job-training program before they can earn enough to support themselves. The judge keeps that in mind when deciding whether to award alimony and how much.
• The Opportunity Cost of the Marriage. Sometimes, marriage requires one spouse to give up a dream and take a less prestigious or high-paying job so the other spouse can pursue a high-earning or well-respected career. A judge can decide that one spouse made a significant sacrifice additional training won’t rectify for the other and can require the other to pay alimony. 
• Age and Health of Each Person. Whether a person is in good physical, mental, and emotional health affects their ability to get alimony. The spouses’ ages also play a role.

If all that left you more confused than informed, you’re not alone. Much of it is subjective and depends on state laws and a judge’s disposition as much as the facts of the case.

An alimony calculator gives you a very rough idea of how much you can expect to pay or receive and for how long. This one gives you the low-end amount (Virginia formula) and high-end amount (Massachusetts formula) and approximates the number of years you’ll have to pay. It gives you the low end (Texas) and high end (California) for that too. It’s a wide range, but knowing how your laws compare to the low- and high-end states is helpful for narrowing it down.

If you and your spouse are getting along during the divorce, you might agree to an amount of financial support without a court order or judge’s intervention. In that case, you can agree to an amount together without having to run through several complex calculations or drag as much of your personal life through a court. 

Doing it on your own saves you a lot of time and hassle. Put the agreement in writing so you have something to fall back on if the receiving spouse has to take the paying spouse to court for reneging on the deal. Working with a mediator gives you a greater likelihood of success, but you should both have legal representation too.

A potential downside of negotiating alimony directly with your spouse is that you could agree on an amount that’s either more or less than the court would award. That’s only a problem if the receiving spouse doesn’t get enough when they could or the paying spouse is overburdened unnecessarily.

Penalties for Failure to Pay Alimony

Whether court-ordered or mutually agreed upon, things can get pretty nasty for delinquent payees if they don’t pay up. 

The exact penalties vary by state but can range from being found in contempt of court to arrest. A court might also garnish the paying spouse’s wages or seize their assets.

There are many reasons someone might struggle to make payments, including illness and financial struggles. If you need to pay alimony but can’t, talk to your lawyer to learn about your options. 

If you’re supposed to get alimony and your ex isn’t paying up, consult an attorney. They can explain your options and whether you need to bring your ex to court. But definitely consult an attorney first. Jailed exes don’t pay alimony, either.

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Types of Alimony

There are many different types of alimony suitable for different circumstances. Depending on your situation, you might receive or need to pay one or more alimony types when you get divorced.

• Temporary Alimony. The lower-earning spouse can receive temporary support while the divorce is ongoing. Temporary support covers the costs of the divorce and daily living expenses. Once the divorce decree is issued, temporary support ends.
• Permanent Alimony. Permanent alimony can last for the rest of either spouse’s life, though it usually doesn’t. The support ends when the receiving spouse remarries or enters into a long-term, cohabiting relationship with another person. In some states, the length of the marriage determines the length of permanent alimony.
• Rehabilitative Alimony. If one spouse needs job training or more education to increase their earning potential, the court may order the other spouse to pay rehabilitative alimony for the duration of the training program. The payments support the receiving spouse while they’re in school and can’t earn income. Payments stop once the other spouse can support themselves.
• Reimbursement Alimony. In some marriages, a spouse works to support the household while the other goes to school to earn an advanced degree. The assumption is that the couple will benefit from the other’s higher earning potential once they finish training. If the couple divorces, a court might award reimbursement alimony to compensate the spouse who worked while the other was in school.
• Contractual Alimony. Contractual alimony is spousal support you agree to with your ex without family court getting involved. 

Whatever the type of alimony, the receiving spouse can either get a lump-sum payment or monthly payments, depending on the court’s orders. With a monthly payment, the receiving spouse has a steady income stream provided their ex pays up. 

With a lump sum, they receive the full amount of alimony all at once, which can be beneficial if they need to buy a house or another large purchase.

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Alimony FAQs

Alimony is complicated. While the nuances vary from state to state, the answers to basic questions remain the same no matter where you get divorced.

What’s the Difference Between Alimony & Spousal Support?

Spousal support and alimony mean the same thing. Spousal maintenance is another term for alimony. Alimony is an older term, meaning you’re more likely to see spousal support or maintenance used by a court or divorce attorney. 

Whether the court uses spousal support or spousal maintenance depends on the state. 

What’s the Difference Between Alimony & Child Support?

The big difference between alimony and child support is who the payments benefit. Child support payments help provide for a child’s needs, including food, clothing, shelter, education, and travel costs. Alimony payments support the spouse.

You must have been married to qualify for alimony. That’s not a requirement to get the court to order child support. 

How Is Alimony Taxed?

Whether you have to pay tax on alimony payments depends on when you finalized your divorce. 

• On or Before Dec. 31, 2018: The IRS expects recipients to pay income tax on any alimony payments they receive. The payer can deduct the value of alimony from their taxable income.
• After Dec. 31, 2018: Recipients don’t have to include money received from alimony payments as part of their taxable income. Likewise, the payer can’t deduct alimony payments.

How Can I Avoid Paying Alimony?

Alimony isn’t part of every divorce. If you and your spouse earn about the same amount, it’s highly unlikely a judge will require one of you to financially support the other. 

Creating a prenuptial agreement with your spouse can also help you avoid having to pay alimony, but that doesn’t help you if you’re already separating. 

Another option is to have a judge examine your former spouse’s earning potential. If your ex can work full-time and increase their income but simply prefers to work part-time (or not at all), a judge might side with you and determine your spouse has the ability to support themselves. Just be careful that doing so doesn’t increase your child support payments, as it may mean your kids have to be in day care more hours per week.

What Can I Do if My Former Spouse Isn’t Paying Alimony?

If the court has ordered your ex to pay alimony and they stop paying, you have the law on your side. 

But before you pursue legal action, talk to them. Check in and remind them you haven’t received your payments. If they still don’t pay, talk to your attorney to figure out your next steps. 

They can help you file a contempt order with the court. A judge can compel your ex to pay and may seize property or garnish wages to make the payments.

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Final Word

Your finances change drastically after a divorce. Alimony can help take the sting out of a changed financial situation for some and exacerbate it for others. If you’re going through a divorce, talk with your attorney about spousal support. 

Your divorce attorney can explain your options or obligations based on your state’s laws. They can also recommend options like working with a mediator. 

Investing in Bitcoin typically involves buying Bitcoin and HODLing on for dear life.

But with Bitcoin’s recent 60%+ drop in price, and crypto winter setting in, Bitcoin may not feel like an attractive investment right now.

But what if you could make money while Bitcoin dropped in price, instead of just waiting for it to go to the moon?

Short selling, or “shorting,” is a speculative investment strategy that profits from an asset falling in price. Bitcoin can fall in price dramatically in just a few days, making it one of the most popular assets to short. 

In this guide we will cover several ways to short Bitcoin, including where to invest.

Note: Short-selling is an advanced investment strategy, and is considered a speculative investment with a high risk profile. Make sure you understand the risks before shorting any asset.

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How to Short Bitcoin

The process of shorting Bitcoin involves borrowing Bitcoin and selling it at today’s price, and then buying it back at a lower price, allowing you to pocket the difference. 

There are several ways to short Bitcoin, some which are more complicated than others. Some of these options are not available to U.S. investors due to securities regulations.

1. Margin Trading

Margin trading is the process of borrowing funds from a cryptocurrency trading broker or exchange. Many crypto exchanges offer the ability to enter “short positions” on Bitcoin and borrow funds on margin to increase your position. Margin accounts also require you to deposit funds as collateral against your short-selling position, which can be sold by the exchange (liquidated) if the price of the asset goes up instead of down. 

In the U.S., short-selling requires use of margin accounts due to Regulation T, a law put in place by the U.S. Federal Reserve. This ensures brokers and exchanges can safely lend margin to borrowers, with the ability to recoup any losses automatically.

2. Futures Trading

Futures trading involves entering into a contract agreement to purchase or sell an asset on a future date at a predetermined price. You can bet on Bitcoin going down in price by purchasing a contract that allows you to buy Bitcoin at a lower price in the future.

Futures contracts can also include leverage, with many crypto exchanges offering up to 100x leverage on trades. This allows traders to purchase 100 times more that their current collateral allows, which can amplify your gains but also your losses.

Futures trading is available on many crypto exchanges, such as Kraken, Binance, and FTX, but is not available to U.S. residents on most of them. Coinbase recently launched Nano Bitcoin Futures, which allows purchasing a futures contract for one-hundredth (0.01) of a Bitcoin and is available to U.S. residents. Bitcoin futures contracts are also available on stock-trading platforms such as eToro and TD Ameritrade.

3. Binary Options Trading

Options trading is a strategy that allows investors to purchase the right — but not the obligation — to buy or sell an asset on a specified date. Binary options are more specific; investors can purchase a contract based on a prediction in price. 

For shorting Bitcoin, inventors would need to purchase a binary put option that predicts a fall in price. For example, if an investor believes Bitcoin will be below $20,000 on a specific date, they can purchase a binary put option with a $20,000 strike price. If correct, the traders will receive a payout (typically set by the broker as part of the contract). If Bitcoin is still above $20,000 by the expiration date of the contract, the investor will lose the premium they paid for the contract.

Binary options are typically not available to U.S. investors and are handled by overseas brokers that may charge high fees. Any unregulated markets carry much higher risk and may be illegal for U.S. investors to take part in.

4. Bitcoin Contracts for Differences (CFDs)

A contract for difference (CFD) is an investment contract that pays out the difference between the opening and closing prices of an asset. Bitcoin CFDs allow investors to purchase a contract based on a prediction that Bitcoin’s price will drop, effectively shorting Bitcoin.

For example, if you purchase a one-week short CFD with an opening Bitcoin price of $21,000 and a week later, upon closing, the price of Bitcoin is at $20,000, you’d profit from the drop in price. If the price increases, you’ll lose money on the investment. 

CFDs, similar to options contracts, typically purchase large quantities of an asset but only require investors to put down a smaller amount to purchase the contract, such as 10% of the total investment. This is considered a leveraged position because the investor is only putting up a fraction of the collateral needed to purchase the assets in the CFD.

Bitcoin CFDs are available through online brokerages such as eToro or Plus500. CFDs are considered a type of derivative investment and typically are not available to U.S. investors.

5. Prediction Markets

Bitcoin prediction markets are similar to other wager-based financial markets, such as sports betting, allowing investors to place wagers based on a prediction about Bitcoin’s price. Inventors who predict Bitcoin’s price will go down are essentially short-selling BTC.

Some of the popular prediction market applications include Augur and Polymarket. The international FTX exchange also offers some prediction markets, although it is restricted in many countries. As with other derivatives trading markets, prediction markets typically are not available to U.S. investors.

6. Inverse Bitcoin Exchange-Traded Products

Investing in exchange-traded funds (ETFs) is easy, and you can access them at any popular online brokerage. But if you have ever wanted to bet against a certain ETF, you would want to invest in an inverse ETF. These ETFs, also known as short ETFs, are a collection of derivatives products that make money when the price of an asset goes down.

There are only a few ETFs available to short Bitcoin, with only one available to U.S. investors. The ProShares Short Bitcoin Strategy ETF (BITI) is available on most brokerages, such as Vanguard, Fidelity, and TD Ameritrade. It is inversely correlated with the S&P CME Bitcoin Futures Index. It does come with a high expense ratio (around 0.95%) and is designed to track the daily change in Bitcoin price fluctuations, compounding your returns (or losses).

7. Short-Sell Bitcoin (BTC) Assets

One of the simplest ways to short-sell Bitcoin is to sell Bitcoin you already own on an exchange, wait for the price to drop, and then buy it back at a lower price. 

Although this is a risky strategy, it is far less complicated than other short-selling methods. There are also ways to short-sell your Bitcoin on a crypto exchange, and even leverage your short position, thereby amplifying your gains (or losses).

If the price of Bitcoin goes up in value, you may be stuck paying a higher price for Bitcoin to repurchase it. In the case of using your Bitcoin as collateral on a crypto exchange, you may lose your Bitcoin altogether if your short position gets liquidated.

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Final Word

Short-selling is a sophisticated trading strategy that is used by professional traders and hedge funds to protect their investments in the case of a market downturn. Shorting Bitcoin has become extremely popular as of late, especially in light of the massive drop in price in 2022.

If you are a U.S. investor looking to short-sell Bitcoin, probably the easiest method is to purchase the ProShares Short Bitcoin ETF in your favorite brokerage account. Just be aware of the nearly 1% expense ratio, which is rather high. 

And keep in mind that shorting Bitcoin comes with massive risk, including the risk of losing all of your money in the trade. With the unpredictability of the cryptocurrency market, as well as the added risk of using leverage, short-selling can be a fast way to lose a lot of money.

Think you don’t need a renters insurance policy unless you’re older, well-off, and have expensive furniture or art collections?

If so, you’ve bought into one of the myths about renters insurance. And without basic personal liability coverage for your property, you’re playing fast and loose with your financial future.

Peace of mind is priceless, and it costs less than you may think to protect yourself from potential financial ruin. And you have no shortage of cheap renters insurance coverage options to choose from.

Best Renters Insurance Companies

These are the best renters insurance companies on the market. But no two insurers are alike, so before choosing a policy, carefully consider each company’s relative strengths and weaknesses, not just its insurance rates.

Pay special attention to feedback from third-party rating agencies, such as A.M. Best and J.D. Power. Their word matters more than a thousand anonymous customer reviews.

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Best Overall: Amica

Amica delivers reasonably priced, customer-friendly renters insurance with a smile. Policies start under $20 per month, although your actual premium will vary based on where you live, what you’re covering, and which optional add-ons you choose.

Amica separates itself from the pack with clear value-adds like:

• A rapid application process that generates a working policy within minutes
• Up to 15% off when you combine renters, auto, life, and umbrella policies
• Loyalty discount after just 2 years with Amica
• Claim-free discount after just 3 years 
• A+ (Superior) financial strength rating from A.M. Best

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Apply for Renters Insurance With Amica

Best Bundle Discount: Erie Insurance

Erie Insurance is renowned for deeply discounted policy bundles. Combine your renters policy with auto insurance, life insurance, car insurance, or other policies, and you could qualify for premium discounts of 30% or more.

Additional features:

• Ranked second overall customer satisfaction in J.D. Power’s 2020 home insurance study
• More than 12,000 local agents (an average of 1,000 per state served)
• Great homeowners insurance when you’re ready to buy
• A+ (Superior) financial strength rating from A.M. Best

Apply for Renters Insurance With Erie

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Best Online Application Process: Lemonade

Lemonade is a lean, nimble renters and home insurance provider with a speedy onboarding process and an all-online policy application workflow that makes it easy to get renters insurance and get on with your life. Lemonade brags that the typical application takes just 90 seconds to complete, an order of magnitude faster than most competitors.

Additional features:

• Top honors in J.D. Power’s 2020 home insurance study (866 out of 1,000 points)
• Basic policies start as low as $5 per month
• Operates as a Public Benefit Corporation and certified B-Corp, managing a “triple bottom line” — people, planet, profit
• Fast, partially automated claims process — the average claim takes just 3 minutes to complete

Apply for Renters Insurance with Lemonade

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Best Local Agent Network: State Farm

State Farm is one of the largest U.S. insurers, period, and boasts the largest local agent network of any renters insurance company on this list: nearly 20,000 in all. You don’t have to work with a State Farm agent to open or manage a renters insurance policy, but it’s nice to know you can turn to a live person in your community when the need arises.

Additional features:

• A++ (Superior) financial strength rating from A.M. Best
• Add-ons include special hazard coverage (earthquake, flood) and scheduled personal property protection for valuable items
• Save up to 17% when you bundle renters insurance and auto insurance

Apply for Renters Insurance With State Farm

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Best for Policy Add-ons: Allstate

Allstate is a full-service insurer that’s often mentioned in the same breath as State Farm. While State Farm’s local agent network is a bit bigger, Allstate noses ahead when it comes to policy add-ons like:

• Scheduled personal property
• Identity theft restoration coverage
• Umbrella insurance, which Allstate says is a must for pet owners in multi-tenant buildings
• Guest medical coverage, even if you’re not at fault

Additional features:

• Add renters insurance to an existing auto policy for as little as $4/mo
• Average monthly premium of $16
• 25% discount for nonworking seniors (55 and older)

Apply for Renters Insurance With Allstate

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Best for Actual Cash Value Replacement Coverage: Nationwide

Nationwide’s standard renters insurance coverages go beyond many competitors’. For example, it includes identity theft protection and zero-liability fraud protection for unauthorized debit card purchases at no additional cost — above-and-beyond rarities that can really come in handy for budget-conscious renters.

Nationwide also has an optional replacement cost add-on called Brand New Belongings. If you’re willing to pay modestly higher premiums, Nationwide promises to reimburse you at the estimated cost of buying new replacements for stolen or damaged items — rather than their current cash value, as is more common. This coverage is likely to pay for itself after a single burglary or covered loss.

Apply for Renters Insurance With Nationwide

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Best for Professional Discounts: Farmers Insurance

Farmers Insurance is one of the few renters insurance companies that advertises premium discounts for certain types of public servants, including firefighters and teachers. These discounts vary by location and may not be available in all areas, but they’re a nice leg up for hardworking, often-underpaid renters.

Additional features:

• Smoke-free household discount (after 2 years)
• Affinity discounts for members of partner organizations
• “Personal articles floaters” (customizable sub-policies) for specific items worth over $500

Apply for Renters Insurance With Farmers

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Best Online Renters Insurance Broker: Policygenius

The quote aggregator Policygenius doesn’t issue policies of its own, but it’s worth including on this list. Policygenius walks you through the policy-building process, helping you save time by selecting from a range of coverages, deductibles, and add-ons and receiving quotes from multiple providers.

You’ll get a slew of renters insurance offers in an easy-to-understand format, making it painless to select the most cost-effective policy without sifting through emails or spending hours on the phone.

Apply for Renters Insurance With Policygenius

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Methodology: How We Select the Best Renters Insurance Companies

We use several important metrics to evaluate renters insurance companies. We pay special attention to metrics relevant to companies’ likelihood of paying out claims, to policyholders’ range of choices and relative cost, and to the overall customer experience.

Financial Strength Rating

A third-party financial strength rating measures how likely an insurer is to pay out on claims, based on financial reserves and other factors. We use ratings from highly regarded independent rating agencies that impartially assess insurers.

Customer Satisfaction Rating

We also use third-party customer satisfaction ratings that use customer surveys and other data to determine how well companies treat their customers (on average). While your experience could vary, a high customer satisfaction rating should provide some assurance that your insurer will treat you well.

Coverage Options

Renters insurance isn’t as complicated as some other types of insurance, but it does take different forms and may involve riders (add-ons) that affect policy cost and coverage. And while insurers with more coverage options aren’t necessarily better than more narrowly tailored competitors, we do prefer those capable of meeting a wide range of customer needs.

Relative Cost

Renters insurance is not as expensive as homeowners insurance, on average. It’s also not as expensive as many first-time applicants fear.

Still, premiums do vary by insurer and policy. We aim to find insurers that offer better overall value for policyholders’ money — not necessarily the absolute lowest cost but a favorable balance between pricing, coverage, and claims.

Application Process

Applying for property insurance shouldn’t be an ordeal. And while most renters insurance companies now process applications online, the duration and complexity of the experience varies widely. We prefer companies that make applying for renters insurance — as well as adding or dialing back coverage — as easy as possible

Claims Process

When you file a legitimate claim, you have every right to expect your insurance company to process, approve, and pay it quickly. Unfortunately, this isn’t the norm. We pay close attention to customer-reported claims issues and third-party evaluations of insurers’ claim processes to ensure that we’re recommending companies that actually make good on their promises.

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Renters Insurance FAQs

You have questions about renters insurance. We have answers.

Do You Really Need Renters Insurance?

Probably. Despite persistent myths to the contrary, renters insurance makes sense for many renters. 

If you don’t want to pay out of pocket to replace possessions of value — even “everyday” items like your TV, couch, or home computer — renters insurance is a good investment. And you can’t expect your landlord’s property insurance policy to replace these possessions. Their policy only insures the building itself, which doesn’t help you at all.

Renters insurance can also shield you from liabilities that may arise in the course of your occupancy. For example, if a guest injures themselves in your apartment, you could be the one held liable for their medical bills and lost income, not your landlord. Renters insurance can help pick up the tab.

How Much Does Renters Insurance Cost?

Not as much as you might think. Your actual monthly or annual premium depends on factors like:

• The policy’s dollar value (the maximum it’ll cover)
• The policy’s deductible (how much you have to pay out of pocket before coverage kicks in)
• Whether you have any unusually valuable possessions, such as gold or diamond jewelry (these may require supplemental insurance)
• Whether your policy covers items’ replacement cost value (RCV) or actual cash value (ACV) — the former being considerably more expensive

But a basic ACV policy with a relatively low coverage limit and relatively high deductible is likely to be very affordable — maybe as little as $10 or $20 per month. That’s not much more than the cost of your favorite streaming subscription.

What Does Renters Insurance Cover?

Renters insurance policies provide three broad types of coverage:

• Contents coverage, which reimburses you for possessions lost or damaged by covered perils
• Liability coverage, which defrays the cost of lawsuits brought by people injured or sickened in your rental
• Loss of use coverage, which helps pay for temporary housing if your rental unit becomes uninhabitable due to a covered event

Renters insurance policies use one of two lenses to determine whether to cover particular events: “named perils” and “all risk” policies. 

The former limits coverage to events specifically named in the policy, while the latter covers claims related to any event except those specifically excluded in the policy. “Named perils” policies have lower average premiums than “all risk” policies. 

What’s the Difference Between RCV and ACV?

Renters insurance policies use two different scales to calculate payouts: replacement cost value (RCV) and actual cash value (ACV). 

An RCV policy calculates replacement cost based on current market value for an acceptable replacement. In other words, RCV pays enough for a brand-new replacement. 

An ACV policy accounts for depreciation. It pays what the insurer thinks you’d get for an item if you sold it used. For older items, that’s far less than RCV.

Because they promise higher payouts, RCV policies have higher premiums than ACV policies. If you have a lot of relatively new possessions, an ACV policy could still provide a decent payout while fitting better into your budget.

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How to Choose the Best Renters Insurance Company

When evaluating renters insurance companies, consider how they address your specific coverage needs as a renter. Ask questions like:

• Does the insurer offer policies with contents coverage, liability coverage, and loss of use coverage?
• Do payouts use the replacement cost value (RCV) or actual cash value (ACV) scale?
• Do policies cover “all risk” or “named perils” only?
• Can you add supplemental coverage for valuable items directly to the insurer’s policies?
• What other riders or modifications are available?

You’ll want to assess factors like financial strength ratings and customer satisfaction ratings as well. Even if an insurer appears to tick all the boxes, it’s not much good if they’re not able to pay out on a future claim.

Before you make any big financial decision, it’s crucial to learn how it may affect your credit score. 

If you’re looking to refinance, it’s natural to wonder if it might hurt your credit.

Your credit score might drop slightly initially after refinancing, but only for a brief period of time. But your credit score may likely rebound–and even improve–If you make your new loan payments on time.

We’ve outlined what you need to know about refinancing, whether you’ve already made your choice or are still considering your options.

What Is Refinancing?

Refinancing is when you take on a new loan to pay off the balance of your existing loan. You’re essentially replacing an existing debt obligation with a new debt obligation that’s under different terms.

Your approach depends on whether you’re refinancing a home, car, student loan, or personal loan. It’s not a decision to take lightly.

Does Refinancing Hurt Your Credit? 3 Factors to Consider

If you’re worried about how refinancing will affect your credit health, remember that there are multiple factors that play into whether or not it hurts your credit score, but the top three factors are:

1) Having a Solid Credit Score

You won’t be in a strong position to negotiate refinancing terms without decent credit.

2) Earning Sufficient Income

If you can’t prove that you can keep up with loan payments after refinancing, it won’t be possible.

3) Proving Sufficient Equity

You’ll also need to provide assurance that the payments will still be made if your income can’t cover the cost. It’s recommended that you should have at least a 20 percent equity in a property when refinancing a home.

How Does Refinancing Hurt Your Credit?

Refinancing might seem like a good option, but exactly how does refinancing hurt your credit? In short, refinancing may temporarily lower your credit score. As a reminder, the main loan-related factors that affect credit scores are credit inquiries and changes to loan balances and terms.

Credit Inquiries

Whenever you refinance, lenders run a hard credit inquiry to verify your credit score. Hard credit inquiries typically lower your credit scores by a few points. Try to avoid incurring several new inquiries by using smart rate shopping tactics. It also helps to get all your applications in during a 14–45 day window.

Keep in mind that credit inquiries made during a 14–45 day period could count as one inquiry when your scores are calculated, depending on the type of loan and its scoring model. Regardless, your credit won’t be permanently damaged because the impact of a hard inquiry on your credit decreases over time anyway.

Changes to Loan Balances and Terms

How much your credit score is impacted by changes to loan balances and terms depends on whether your refinanced loan is reported to the credit bureaus. Lenders may report it as the same loan with changes or as an entirely new loan with a new open date.

If your loan from refinancing is reported as a new loan, your credit score could be more prominently affected. This is because a new or recent open date usually means that it is a new credit obligation, therefore influencing the score more than if the terms of the existing loan are simply changed.

How Do Common Types of Refinancing Affect Your Credit?

Refinancing could help you pay off your loans quicker, which could actually improve your credit. However, there are multiple factors to keep in mind when refinancing different types of loans.

Refinancing a Mortgage

Refinancing a mortgage has the biggest potential impact on your credit health, and it can definitely affect your FICO score. How can you prevent refinancing from hurting your credit too much? Try concentrating your credit inquiries when you shop mortgage rates to a 14–45 day window — this will help prevent multiple hard inquiries. Also, you can work with your lenders to avoid having them all run your credit, which could risk lowering your credit score.

If you’re unsure about when to refinance your mortgage, do your research to capitalize on the best timing. For example, refinancing your mortgage while rates are low could be a viable option for you — but it depends on your situation. Keep in mind that losing your record of paying an old mortgage on time could be harmful to your credit score. A cash-out refinance could be detrimental, too.

Refinancing an Auto Loan

With auto loan refinancing, you’re taking out a second loan to pay off your existing car debt. In some cases, refinancing a car loan could be a wise move that could reduce your interest rate or monthly payments. For example, if you’re dealing with an upside-down auto loan, you might consider refinancing.

Would you prefer a longer or shorter loan term? A longer loan term would mean lower monthly payments, but it’ll also take you longer to pay off and you could spend far more money on interest. And remember that your car will constantly be depreciating in value. 

If you plan on selling your vehicle within 5 years, a long-term loan might not be a good option for you.

Refinancing Student Loans

When it comes to student loan refinancing, a lower interest rate could lead to major savings. Refinancing your student loans can be rewarding and can save you money in the long-term.

You can usually refinance both your federal and private student loans. However, be aware that refinancing a federal loan with a private loan will have an impact on the repayment options available to you. 

Federal loans offer significantly better repayment options than private loans, so keep that in mind before making your decision.

Pros	Cons
If the cost of borrowing is low, securing a lower interest rate is possible	Credit scores can drop due to credit checks from lenders
If your credit score greatly improved, you can refinance to get a better rate	Credit history can be negatively affected by closing a previous loan to refinance
Refinancing a loan can help you lower expenses in both the short term and long term	Refinancing can involve fees, so be sure to do a cost-benefit analysis

How to Prevent Refinancing from Hurting Your Credit

If you plan ahead, you can make efforts to limit how much refinancing negatively impacts your credit and overall financial health.

Before you begin the refinancing process, see if there’s anything you can do to boost your credit score so you can secure a better rate. Perhaps you can pay off one of your smaller loans or credit card debt. 

Try to prepare by reading your credit reports closely, and make sure there are no errors that could keep your credit application from being approved at the best possible rate. Stay one step ahead of any errors, so you still have time to dispute them. 

If refinancing makes sense for your situation, you shouldn’t be concerned about it hurting your credit. Refinancing is very common and, most of the time, it’s relatively easy for your credit score to bounce back.

As long as you’re prioritizing your overall financial health through smart decision-making and budgeting, refinancing shouldn’t adversely hurt your credit in the long run.

How to Figure Out If Refinancing Has Hurt Your Credit

Before you file an application for a refinancing loan, check your credit score so you know where it stands before lenders make hard inquiries into your credit. 

How do you check your credit score? You have two options. 

1. You can get your credit score from one of the three major credit bureaus–you’re entitled to one free credit check per year, for each of the three bureaus.
2. You can check your credit score for free with the Mint app, which is the easiest method. Mint will also update your credit score every month, so it’s useful for ongoing credit monitoring.

After you’ve been qualified by a lender, check your credit score again. It’s possible that your credit score may have dropped by 5 or 10 points. That’s common when you’re applying for a new loan, and it’s not something you should be too worried about. 

Your credit score should bounce back within a few months if you’re making your loan payments on time.

If your credit score dropped by more than 10 or 20 points, then it could signal a bigger credit problem or an error in the refinancing process.

What To Do If You Notice Refinancing Has Affected Your Credit? 

If you notice that your refinancing loan causes alarming changes when you check your credit score, be sure to reach out to your creditor or consider filing a dispute.

One of the most common errors is that multiple hard inquiries were not counted as a single inquiry. As mentioned earlier, you’re typically given a 14- to 45-day window when you’re applying for a refinancing loan. During that window, all credit inquiries that your lenders make will be counted as single inquiry. 

A single inquiry shouldn’t hurt your credit score by much.

However, multiple inquiries may have a bigger impact on your credit score. Check your records and make sure that you applied for every loan within a short period of time. Reach out to your creditor and verify they’ve only counted a single credit inquiry when determining your credit score.

You can file a dispute with the credit bureaus if you feel like they made a mistake when reporting your credit. Ask your lender which bureau they received your credit report from, and file a dispute with that credit bureau. 

You may have to file a dispute with multiple credit bureaus if your lenders receive their credit reports from different providers.

Pros and Cons of Refinancing Your Loan

There are benefits and drawbacks to refinancing a loan. Let’s cover the benefits first:

Pros of Loan Refinancing:

• Saving Money: You could save money on interest payments if your new loan has better interest rates than your previous loan.
• Improving Your Credit: If refinancing puts you in a better financial situation, then you’ll have an easier time paying down your debt, which may lead to your credit score improving.
• Getting a Better Term: On a tight budget? You can ease your financial burden by refinancing with a longer term. A longer term will reduce your monthly payments and can make it easier for you to pay your bills.

Cons of Loan Refinancing:

• May Temporarily Hurt Your Credit: Your credit score may take a slight dip due to lenders making credit inquiries and because you’ll have one of your credit accounts closed. But remember that the impact is often very brief and temporary.
• Might Not Save You Money: Refinancing a loan won’t always save you money. Make sure that you’re able to secure rates that are at least 1-2% better than your current loan. Otherwise, refinancing might not be worth the time and trouble.

When Is Refinancing Worth the Risk?

As we’ve mentioned, refinancing will most likely cause your credit score to fall by 5 or 10 points. How do you know whether it’s worth the risk?

Here are a few situations in which it might be ideal to refinance:

• You Pay High Interest: If you’re paying high rates on your loan, refinancing could benefit you if you’re able to secure a lower interest rate.
• You Need a Different Term: Perhaps you have a short-term loan, and are struggling with high monthly payments. Or maybe you have a long-term loan, but you’re capable of making higher monthly payments so you can pay it off faster and save money on interest. Refinancing can help you restructure your loan terms in ways that are more beneficial for you.
• Your Car is Holding Value: Thinking about refinancing a car loan? It might be worth considering if your vehicle is not depreciating too quickly and you don’t plan on selling it within a few years.
• Avoiding a Balloon Payment: Refinancing can help you avoid an upcoming balloon payment.

When Is Refinancing Not Worth the Credit Hit?

When is it not worth it to refinance? Here are a few situations in which you might want to avoid refinancing.

• You’re About to Take Out a Bigger Loan: Hard inquiries will likely impact your credit score, so you might hold off on refinancing—or even filing an application for refinancing—if you plan on taking out a second loan. For example, if you’re about to apply for a mortgage, you may not want to refinance your auto loan. The drop in credit could affect the rates you’re offered on the mortgage.
• You Have Federal Student Loans: When you refinance federal student loans, you’ll lose federal loan benefits like lower rates or income-based payment plans.
• You’re Satisfied with Your Loan Term: If you’re happy with your loan term, then you might not want to refinance if it’s going to change the repayment schedule.
• Can’t Handle the Fees: Just like with a standard loan, you’ll have to pay origination fees, application fees, and other costs when you refinance. You might want to hold off on refinancing if you’re not prepared to cover these costs.

Before you refinance, think carefully about why you’re refinancing and how it will benefit you. Refinancing is a common practice, but you don’t have to do it just because so many other people are doing it. It’s not a financial rite of passage.

Use Mint to Help You Stay Organized While Paying Off Loans

Want to stay on top of your debt? Use the Mint app to keep yourself organized. Mint can help you keep track of your monthly payments, monitor your credit score, and stick to your budget. It’s an excellent tool for anyone trying to improve their financial health.

Want to buy a home? For most people, the promised land of homeownership lies through the mortgage loan. A mortgage is a loan you can use to buy a house or condo.

A mortgage can be a tricky loan to navigate because houses are so much more expensive than other assets. 

Small differences in rates and terms may cost (or save you) a huge amount of extra cash by the end of the loan term. Mortgages can also be tough to qualify for.

In this guide, we’ll explain how mortgages work and give you tips on how to prepare for this gargantuan loan.

What Is a Mortgage?

A mortgage is essentially a loan. When you put a down payment on a home, it pays for part of the home’s cost (typically 20%). A bank or mortgage company loans you the rest of the money to pay for the home. 

You then set up a series of payments to pay back the loaned money, along with interest, for a fixed term. The catch is: to ensure you pay back the money, your newly purchased house becomes collateral, meaning if you don’t pay, your house goes away, meaning the lender takes ownership of your house from you to pay back the loan—you will need to find another place to live.

That’s the simple definition of a mortgage, but there are a lot more details and specifics that are important to learn about before rushing into getting one.

How Is a Mortgage Different Than a Loan?

Is there a difference between mortgages and other types of loans?

A mortgage is a type of loan that’s secured by real estate property. When you take out a mortgage, the lender makes a claim on the home that you’re purchasing. If you’re unable to make your mortgage payments, the lender can foreclose on the home and sell it to recuperate the money you didn’t pay.

Mortgages are also unique in that you typically spend more years paying them off. Many people pay off mortgages over a term of 30 years. There are mortgages available with a 15-year term, but they’re harder to qualify for, and they typically come with much higher monthly payments.

You might think that there isn’t much difference between a 4% and  5% interest rate, but over 30 years, that could amount to thousands of extra dollars spent or saved.

You may need a higher credit score for a mortgage than for other types of loans. To get the best interest rates on a mortgage, many people start working on their credit score years in advance.

Why Do People Get Mortgages?

According to Zillow, the typical American home is valued at $354,165. However, if you’re living in urban areas, this number can go up drastically. Many of us don’t have that much cash just laying around, so instead of robbing a bank, most people take out a mortgage. 

Who Qualifies for a Mortgage?

When you apply for a mortgage, lenders will take a deep dive into your personal finances. They’ll usually evaluate the following criteria:

• Credit Check: The lender will check your credit score. Your credit score may give clues on how likely it is you’ll pay off the mortgage. If you have a high credit score, then you probably have a strong track record of making loan payments on time. If you have a poor credit score, then it’s possible you haven’t been paying your loans on time, or you’ve been maxing out your credit cards too often. Your credit score is a complicated subject, so be sure to read up on it if you need more clarity on how your credit score is determined.
• Latest Tax Return: The lender may ask to see your most recently filed tax return for proof that your income is high enough to pay the mortgage payments along with other expenses like taxes without hardship.
• Proof of Employment: You may also be asked to provide proof of employment, like a pay stub. The lender wants to know that you’re truly earning the amount of income you claim to be making.
• Down Payment: It’s common to place a down payment on the house when you take out a mortgage—in other words, you’re paying for a percentage of the house right from the start. Historically, it was common to make a 20% down payment when you take out a mortgage, but some types of mortgages may only require a down payment of 3.5%. It all depends on the type of mortgage you’re getting and the preferences of the lender. Most lenders will not qualify you without a down payment.

Your mortgage application can be denied if you have a poor credit score, have taken on too much debt that’s straining your finances, or have gone through a bankruptcy or a civil case—for instance, if a court requires you to pay damages for an incident.

If you don’t qualify, you can seek out a different lender, or you can work to improve your credit and personal finances before moving forward.

How Do Mortgage Payments Work?

Every month, you’ll make a payment on your mortgage loan, plus the annual percentage rate (APR) you agreed to pay. If you did not make a down payment of at least 20%, you might also need to pay for monthly mortgage insurance.

It’s important that you pay your monthly mortgage payments on time. Failure to pay on time may result in your lender foreclosing on the home.

Do You Need Mortgage Insurance?

If you make a down payment of less than 20%, you’ll probably be required to get mortgage insurance (also known as private mortgage insurance).

Mortgage insurance protects the lender – not you. If you fail to pay your mortgage, the money you’ve put into the mortgage insurance will be used to cover the lender’s expenses when they foreclose on your home. Typically, mortgage insurance is included in your monthly payments.

Most of the time, you will not have to pay mortgage insurance if you’re able to make at least a 20% down payment on the home.

Financial Responsibilities of Having a Mortgage

It’s crucial to your financial health to also know what can happen if you sign up for a mortgage you’re not going to be able to pay. 

Your new house will be foreclosed, you’ll have trouble getting another mortgage in the future, you could get a huge tax bill, and your credit score will drop significantly. 

Before you take the plunge, make sure you have thoroughly researched your chosen lender and the structure of the mortgage, so you’re not hurt later on because you took on something you couldn’t afford. (Check out our guide on how to budget for a house.)

Adjustable vs. Fixed-Rate Mortgages

There are two main types of home loans that you can choose from: a fixed-rate mortgage or an adjustable-rate mortgage.

 A fixed-rate mortgage functions exactly how it sounds. Your interest rate will remain fixed and will not change during the life of the loan. Additionally, your monthly payment, including both principal and interest, stays the same. 

Sounds like a great deal right? Well, the drawback is that the interest rates on fixed-rate loans are typically higher than the rates on adjustable-rate mortgages. So you could end up paying a bit more for the security of knowing that your payments will never change.

Now, if your goal is to save money in the short term, you might want to consider an adjustable-rate mortgage or ARM. 

These home loans have a lower initial interest rate compared to fixed rates but could adjust after a set period of time (typically five to seven years) depending on changes in market rates. That means your monthly payments could increase or decrease based on how the interest rate changes. While you’re rolling the dice with these types of loans, they can end up saving people a lot of money, which you can invest back into paying off your debt.

If you’re trying to decide between a fixed-rate or ARM, one very important thing to consider is, what are your future plans? 

Fixed-rate repayment plans last either 15 or 30 years. Yes, you read that right: 30 years!  So if you have no plans to pack up everything and move across the world on a whim, a 15 or 30-year fixed-rate mortgage could be the right fit for you.

But if you can’t be tamed and want to keep your long-term options open, Lance Davis at Bankrate notes that “[Adjustable-rate mortgages] offer a cheaper way for borrowers who don’t plan on living in one place for very long to buy a house.” If you’re a first-time homebuyer, but are young and constantly on the move, an ARM could be a suitable option.

Applying for a Mortgage

Once you’ve determined what type of mortgage fits you and you’re ready to buy a home, it’s time to apply! But how do you actually go about doing that? Well, before you fill out an application, you’ll need a few things first, including: know what type of mortgage you want, which lender you want to work with, check your credit score, get preapproved for a loan amount, and gather all your paperwork.

If you have the first two items ready to go, the next step is to check your credit score. Your credit score could impact whether you will qualify for a loan and the rate you will be offered. 

You’ll want to have your credit score and debt-to-income ratio, in excellent shape to qualify for the best loan possible. What is debt-to-income ratio? This measures the amount of monthly debt you have compared to your monthly income. 

It’s recommended to check these numbers before you apply to get pre-approved because mortgage pre-approvals evaluate your financial history to see how big of a loan you can qualify for. With Turbo you can easily check your numbers to see if you might be financially ready to buy or if you still need time to improve where you stand.

Make sure you don’t skip over the preapproval process, because pre-approval letters can actually help you in the home loan process. A mortgage pre-approval is like a golden ticket: not only does it show that you’re a serious buyer, but it can put you ahead of other buyers who are looking at the same home as you. 

One word of caution: don’t do this unless you are ready to buy and your credit score is as high as possible. Once you’re ready, this letter will help you find a lender who can work with you to find the loan that best suits you.

Helpful hint — now that you’re well versed in what you should do when applying for a mortgage,  you should also be aware of what not to do, so you aren’t caught in an awkward situation later.

And that’s it! You’ve passed this mortgage lesson with flying colors.

Once upon a time, job hopping was seen as unprofessional and unnecessary. In fact, it was relatively common to spend your entire career working for one employer, gradually working your way up the company ranks and receiving regular pay raises along the way.

But these days, maintaining an upward career trajectory usually requires a little more job mobility. That means keeping your eye open for new opportunities and leveraging your current salary and benefits for something better.

But while job hopping is often necessary, there are instances where it can do more harm than good. Let’s take a look at the pros and cons of job hopping, and go over some strategies for doing it.

What is Job Hopping?

Job hopping refers to the idea of switching employers more than normal, usually after less than two years at a company. Job hopping often has a poor connotation because some people think it means you can’t handle commitment or that you’re a picky employee.

Pros of Job Hopping

May earn more money 

One of the most common reasons that workers leave companies quickly is because they can earn more when they switch to a new employer. Research from Bloomberg shows that when you stick with your current employer, you’ll get a 4% raise on average. But when you go somewhere new, you’ll get a 5.3% raise. That kind of difference can add up over time.

May learn new skills

Every company works differently, even if you’re in the same industry. When you job hop, you may be able to learn new skills that you wouldn’t have learned in your previous position. And if you previously worked for a company that was behind the times, moving to a new role could help you catch up.

Cons of Job Hopping

Will lose benefits 

When you’re a new employee, you often have to stay with the company for a certain period of time before you’ll be eligible for benefits like paid vacation, sick days and 401(k) contributions. The exact amount of time you have to work to qualify for those perks depends on the company and your employment contract. 

Some employers require that you work for six months before you can accrue significant vacation time. Also, some will provide more vacation days the longer you’ve been there. 

There may be real financial implications to job hopping. For example, if you have to work for one year before you can receive matching 401(k) contributions, that is real money that you’ll lose out on. Many companies have a vesting schedule, which means that you will not receive 100% of the employer contributions until you work there for a specific amount of time.

For example, let’s say your new company has a five-year graded vesting schedule. This means that you will earn 20% of the employer contributions every year. If you leave before five years, you will receive a prorated amount of employer contributions. 

You should factor this in when switching companies. Make sure that the salary increase and other benefits will make up for any lost 401(k) matching contributions.

In some cases, you may be able to negotiate these benefits before you start work, but it depends on the employer and what they provide for other workers. 

Could look bad to future employers

Employers may frown upon job-hopping, so having a slew of one-year stints could look bad on your resume. 

If you do have more than two instances of leaving a job after less than a couple of years, consider addressing it in your cover letter. If you don’t want to discuss it in a cover letter, then be prepared to talk about it during an interview. 

How to Job Hop Correctly

If you’re job hopping because of a poor work environment, you should still try to be polite and civil when you leave. Everyone you know is an industry connection, and if you damage one of those connections, it could hurt you in the future. You never know who will be your future boss or team member down the line.

During your exit interview, be mindful when giving constructive feedback so it doesn’t come off the wrong way. 

If the main reason you want to leave is financial, try negotiating a raise before you look for a new gig. Your current employer may be willing to increase your salary. If they won’t give you a raise and you want to stay, you could start applying for new jobs and use an offer letter as a bargaining chip.

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Buying your first house might be the biggest financial investment that you’ve ever made to this point in your life, and possibly the most complicated. In addition to determining if you’re making a sound financial investment, owning your home is just as much an emotional decision. That’s because where you choose to live affects things like who you will meet and become friends with, your daily commute, your children’s friends and education and so much more. While there is no one-size-fits-all decision for deciding if you should buy a house now, there are a few things that you’ll want to keep in mind when making that decision.

What to Consider Before Buying a House

Here are a few of the most important things to consider before buying a house:

• Savings — Make sure you have enough money saved up not only for a down payment but for costs that come with being a homeowner
• Location — Location, location, location — there’s a reason that’s one of the most common real estate maxims. Check out not only the immediate neighborhood but the surrounding area
• Interest rates — Prevailing interest rates and macroeconomic conditions will play a big part in determining your monthly mortgage payment 
• Taxes and cost of living — Another big part of your monthly payment will be your home’s property taxes. Property and income tax rates can vary widely even within geographically similar areas.
• Budget — In addition to making sure you have enough money saved up, consider how your new home purchase will affect your budget going forward.

Rising Mortgage Rates

For decades, interest rates wenthave gone lower and lower. It has seemed like every time you might think that interest rates were as low as they could possibly go, they gotkept going even lower. However, wWith the Federal Reserve raising interest rates several times in 2022, the rates on most mortgages also increased. Higher interest rates on mortgages mean that potential homebuyers will have higher monthly payments for the same amount of house. For buyers trying to stick to a particular budget, that means they can afford less house than they would with lower interest rates.

One of the reasons that the Federal Reserve is raising interest rates is to help combat inflation. Higher inflation does correlate with higher housing prices, but raising interest rates helps to balance that out. As we discussed, higher interest rates mean that many homebuyers can’t afford as much house as they might have been able to with lower interest rates. These competing factors help to offset each other. 

Increases in Home Inventory

Over the past several months and years, the housing market has been, for lack of a better word, “crazy”. With more people looking to buy houses than available homes for sale, it has been very much a seller’s market. There have been numerous reports of people being constantly outbid on homes, or having to make an offer over listing price and/or without any contingencies to even have a chance at landing a house.

As interest rates have risen, the pendulum has started to swing back towards buyers. Some buyers have been priced out of the market due to higher interest rates. Still others are playing it safe due to recession fears. The laws of supply and demand hold that with fewer buyers available, housing prices will start to slide. Or, at the very least, not appreciate as fast as they have been over the past several years.

Should You Buy a House Now?

So, should you buy a house right now? There isn’t a single answer that is right for everyone — instead, it will depend on your financial and overall life situation. But many financial advisors suggest being patient and trying to not let your emotions get the best of you. You might see a home that you think is perfect and the only one that will work for you, but the reality of the situation is that there are probably many different homes that will be great options for you.

While nobody knows what the market will do in 2023 and beyond, it is certainly possible that interest rates will continue to rise, meaning it may make sense to lock in rates now. And while home prices may not appreciate at the same levels they have been over the past few years, historically home prices have very rarely actually gone down for very long.If you do decide to buy a house now, make sure to read our complete house shopping guide for tips and tricks on how to make the most of your home purchase.

The Bottom Line

Buying a house is an important financial decision, and one that is often fraught with emotions. If you’re considering buying a house now, there are a few things that you’ll want to consider and ask yourself before making a home purchase. Interest rates have recently risen, driving mortgage rates higher. This is one factor that is contributing to the end of the sellers’ market that we have been in. No matter what you decide, be patient and keep your emotions out of this decision. Talk with your trusted friends, family and advisor to make the right decision for your specific situation.

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It’s no secret that the cost of college has increased faster than the rate of inflation for many years. According to The College Board, inflation-adjusted tuition at four-year, public universities has increased 158% between 1991-92 to 2021-22. So while it may have been easier for previous generations to pay for college with scholarships and a part-time job, many current college graduates turn to student loans.

Student Loan Forgiveness

With more and more college graduates entering the workforce with significant amounts of student loan debt, calls have grown for some sort of student loan forgiveness. Student loans, and the cost of college generally have become mainstays in the political planks of various candidates for state and federal offices. 

There are a wide variety of opinions on whether student loans should be forgiven at all, and if so, to what degree. Some people feel that forgiving student loans benefits mostly relatively well-off people at the expense of those who didn’t go to college. Others feel forgiving student loan debt isn’t fair to those who scrimped and saved to pay off their debts. The contrasting opinion is that many student loan borrowers were taken advantage of or have loans that are placing a real and distinct hardship on their lives. 

President Biden Announces Student Loan Forgiveness in August 2022

The Biden Administration has implemented a variety of different plans to help give relief to those with student loans for higher education. Payments on federal student loans have been paused since the Coronavirus Aid, Relief and Economic Security Act (The CARES Act) was signed in March 2020. Currently, federal student loan payments are paused through December 2022, with payments beginning again in January 2023. 

The Biden-Harris Administration’s Student Debt Relief Plan

In August 2022, the administration announced the Biden-Harris Administration’s Student Debt Relief Plan. Under this plan, qualified borrowers can have up to $10,000 of their student loan debt forgiven. Additionally, anyone who received a Pell Grant in college will be eligible for an additional $10,000 in forgiveness ($20,000 total). Currently, the Biden-Harris plan only forgives federal student loan debt held by the Department of Education. 

This student loan forgiveness is limited by your income — you’ll need to have an annual income under $125,000 for individuals or $250,000 if you’re married. In addition, your student loan forgiveness amount is capped at the total amount that you owe. So if you’re eligible for $20,000 in forgiveness but you only owe $13,000, you’ll only have $13,000 forgiven.

While the announcement of up to $20,000 in student loan forgiveness was the major part of the plan announced by President Biden, the plan also introduced a few ways to make the student loan repayment process more manageable. This includes the following:

• Requiring borrowers to pay only 5% of their monthly discretionary income, down from 10%
• Raising the amount of income that is considered non-discretionary income, to ensure that borrowers earning under 225% of the federal poverty level will not have to make any payments
• Forgiving loan balances after 10 years of payments for borrowers with loan balances under $12,000 (down from 20 years)
• Covering the borrower’s unpaid monthly interest under income-driven repayment plans

How to Qualify for Student Loan Forgiveness

The Department of Education has stated that they already have income data on over 8 million borrowers. This means that these borrowers will receive their forgiveness automatically, with no need to do anything. If you’re not sure if the Department of Education has your income information, or if your income has changed, there will be a form that you can fill out starting in early October. Relief to eligible borrowers will be granted in approximately four to six weeks. You should make sure and apply before mid-November if you want your application to be processed before the end of the year (when payments are expected to resume again).

The Bottom Line

The Biden Administration and the U.S. Department of Education have announced up to $20,000 in student loan forgiveness for federal student loan borrowers whose incomes are less than $125,000 ($250,000 for households). Many eligible borrowers will have their loan amounts adjusted automatically, but there will also be an application available starting in October. The administration has also extended the forbearance period for federal student loans through the end of 2022 as well as made adjustments to the loan repayment process to make it more manageable for low and middle-income borrowers.

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Healthcare and health insurance is a complicated topic, and there are many differing opinions on how it should best be handled. In many countries, there is universal healthcare for everyone, but that is not the case in the United States. While there are government-run programs for the elderly (Medicare) and those with low-incomes (Medicaid), most people get health insurance for their family through private health insurance companies, usually through their employer. 

This coverage often extends to the employee’s family, including spouse and children. Most insurance plans have a limit on how old the employee’s children can be to still receive coverage. When the Affordable Care Act (ACA) passed in 2010, this limit was standardized to be 25 years old. 

How Long Can You Stay on Your Parents’ Health Insurance?

The Affordable Care Act standardized the age in which children could remain on the health insurance plan of their parents at 25. Before the ACA, it was common for insurance companies to drop children after they turned 19. This caused many young adults to be uninsured, which was one thing that the Affordable Care Act seeked to address. With the ACA, you’re covered until you are 26, regardless of if you:

• Are or are not enrolled in school
• Are no longer claimed as a dependent for tax purposes
• Are married
• Have or adopt a child
• Choose not to take employer-sponsored health insurance coverage

In most states, soon after you turn 26, you will no longer be eligible to receive health insurance from your parents’ health insurance plan. If your parents are on an ACA marketplace plan, you’ll usually have until the end of the calendar year where you turn 26. If your parents get their health insurance through an employer plan, you may lose coverage at the end of the month when you turn 26 or possibly on your birthday itself. Make sure you understand the exact date when your coverage ends so you can make plans.

Six states (Florida, Illinois, New Jersey,, Pennsylvania, South Dakota and Wisconsin) have passed additional legislation allowing young adults to stay on their parents’ insurance past the age of 26. If you live in one of those states, make sure that you check your state laws to understand how that might affect you.

What To Do BEFORE You Get Kicked Off Your Parents’ Insurance

If you are turning 26 or otherwise losing access to your parents’ health insurance, there are a few things that you might want to consider doing before your birthday. This is especially true if you’re migrating to a situation where you won’t have health insurance at all, or if the health insurance you’ll have will be not as good.

So before that happens, you should consider making sure that all of your routine healthcare needs are taken care of. If you have any expensive operations or procedures that you have been considering, you should try to schedule those before you turn 26. Make sure to give yourself a bit of leeway as well, since there may be post-operative care as well that you’ll want to make sure to have completed before the deadline.

Health Insurance Options

Your health insurance options after you lose access to your parents’ health insurance will depend on your specific situation.

• If you have a full-time job that includes health insurance as a benefit, then there isn’t much you’ll need to do. You can move to the insurance that comes with your job
• Still a full-time student? Your college or university may provide a health insurance option
• If you have no or limited income, you may qualify for Medicaid or other health insurance targeted towards those with lower incomes
• If none of those scenarios apply, you will probably want to look for health insurance in the Healthcare Marketplace (see below)

Shopping the Healthcare Marketplace

With the introduction of the Affordable Care Act (colloquially known as “Obamacare”), healthcare marketplaces were introduced starting in 2014. Most states have their own individual marketplace, but they typically are similar and conform to federal guidelines. In most cases, there is an open enrollment period that happens at the end of the calendar year, but if you have a qualifying event, you may be able to sign up for a health insurance plan even outside the open enrollment period.

In an ideal situation, you’ll be able to plan your transition over the course of several months. Since you know the date that you’ll lose access to your parents’ health insurance plan, you should be able to take the necessary steps to ensure that you still have access to adequate healthcare after that happens. As with many things, a bit of planning can help avoid possibly significant negative consequences.

The ACA offers several levels of plans: Catastrophic, Bronze, Silver, Gold and Platinum. Each plan has different levels of coverage, copays, deductibles and monthly premium cost. Depending on your income and financial situation, you may also qualify for tax credits that can help reduce the overall cost of the insurance plan. Compare the different options to decide what is right for you.

The Bottom Line

In most cases, young adults can stay on their parents’ health insurance until they turn 26. Before that happens, they can choose to remain on their parents’ health insurance, regardless of any other factors like income, student status, marriage or if they have a child. Make sure to make a plan for when you will lose access to your parents’ insurance, including possibly taking care of outstanding medical procedures beforehand. Then choose from the available insurance options to make the best plan for your situation going forward.

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Bringing a child into the world may be priceless, but fertility treatments are anything but. This high price tag can put aspiring parents into a tough position, forcing them to choose between starting a family and avoiding massive amounts of debt. 

Thankfully, there are several strategies you can use to reduce or eliminate the need to borrow money for fertility treatments. Here are some of the best options, along with some advice for those who find themselves needing to take on debt to pay the remaining costs.

Understand your insurance coverage

In 15 states, insurance companies are required to provide some amount of fertility coverage. This depends on the exact state. If you live in one of these states, look at your specific insurance policy and see what they offer. 

Some employers also provide fertility coverage, even if the state doesn’t require it. Major companies like Starbucks, Apple and Amazon provide comprehensive fertility coverage for qualifying employees. Check your insurance handbook to see what is covered. 

Other Ways to Save on Fertility Treatments

Research costs ahead of time

There are two components to paying for fertility treatments like IUI and IVF: the fertility clinic and the medications. Before choosing a clinic, call around and compare prices ahead of time. Ask the clinic if they offer a discount if you pay for multiple rounds at once or if they will give you a lower price for subsequent rounds.

Once you’ve chosen the clinic, you should then find a pharmacy with the lowest prices on medications. These can vary wildly so it pays to compare. Join message boards on Reddit and see where people have found the cheapest medications. You may have to use multiple pharmacies to get the best overall deal.

Charitable donations

Some charities provide grants to couples and individuals struggling with fertility. Most of these target specific kinds of individuals, like veterans or those who have undergone cancer treatment.

In many cases, you’ll have to provide proof that you can’t afford fertility treatments. This may include a copy of your latest tax return or a recent pay stub. Go here for a list of organizations that provide grants.

Crowdfunding 

If you don’t mind sharing your fertility situation publicly, you can start a crowdfunding campaign and ask for help. Sites like GoFundMe will let you keep all the money you raise even if you don’t reach your final goal.

To increase how much you raise, share as much of your infertility story as you’re comfortable with. Talk about how long you’ve been trying to have a child and what else you’ve done to pay for it. Donors want to see that you’ve tried to find the money yourself before asking other people.

There’s no guarantee of how much money you will receive with crowdfunding, but at least you won’t have to repay any of it. 

How to borrow money to pay for fertility treatment 

Personal loans 

A personal loan can be used for a variety of reasons, including fertility treatments like IVF and IUI. Some lenders specifically advertise IVF loans, but these usually aren’t different than other personal loans.

A personal loan is unsecured, so there is no collateral backing the loan. Interest rates for unsecured loans are generally higher than rates for secured loans like home equity loans, but there’s also no risk of repossession.  

If you have an excellent credit score, you may qualify for a rate as low as 3% APR, but it could go as high as 36%. The average interest rate for a 24-month personal loan is 8.73% APR from May 2022, according to the Federal Reserve’s August 2022 Consumer Credit Release. Before taking out a loan, compare rates and fees with multiple lenders. Many personal loans let you borrow as much as $50,000, which can usually cover two rounds of IVF or several rounds of IUI.

Repayment terms may range from two to seven years. Longer terms have higher interest rates and lower monthly payments, while shorter terms have lower interest rates and higher monthly payments. 

When choosing a loan that fits your budget, make sure to factor in any future baby-related expenses like childcare, diapers, formula and more. It may be better to pick a longer term with a lower monthly payment, so you have plenty of wiggle room in your budget. 

Credit cards 

While credit cards usually have higher interest rates than personal loans and home equity loans, you can apply for a card with 0% intro APR on purchases and may be able to save on interest.

These special 0% intro APR offers usually last between six and 20 months. During that time, you will not be charged interest and the entire monthly payment will go toward the principal. After the offer expires, the interest will switch to a regular rate. The average interest rate for a credit card is 16.65% APR from May 2022, according to the Federal Reserve’s August 2022 Consumer Credit Release.

If you can’t afford to pay back the principal before the offer expires, you may be better off taking out a personal loan.

Home equity loans

You can borrow against the equity in your home as a home equity loan. Home equity loans have lower rates than personal loans, but the lender will seize your home if you default.

To qualify, you need to have between 15% and 20% equity in the home. Repayment terms last five to 15 years, which is longer than a personal loan. The extended time frame can make it easier for couples who need a flexible payment plan.  

401(k) loan

If you have money in a 401(k), you can take out a loan against those funds. For example, you may be able to borrow as much as 50% of the plan’s value, up to $50,000 max. The interest you pay will be deposited directly into your account. Most 401(k) loans have a maximum repayment term.

However, there are significant downsides to using a 401(k) loan. The main drawback of a 401(k) loan is that you’ll have to repay the loan within an expedited time frame if you leave your job or are fired. If you can’t afford to do that, the remaining balance will be treated as an early withdrawal, and you may be assessed fees and penalties. These can be extremely expensive depending on the loan amount.

Also, when you take out a 401(k) loan, the money is no longer invested in the stock market. If the stock market sees huge gains, you will miss out on those.

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No matter how confident you are about the future of the economy, it’s clear that the average consumer is feeling nervous. A June 2022 survey from MagnifyMoney found that 70% of Americans think a recession is coming. 

But a recession affects everyone differently, and there are some professions that tend to thrive even when the economy dips. Read below to learn about the 10 most recession-proof careers.

Top 10 Recession-Proof Jobs

When a recession occurs, the economy shrinks and businesses suffer. Many industries start laying off workers, sometimes in huge droves. But not all jobs are similarly impacted during a recession.

Some fields are temporarily destroyed, like those in hospitality, tourism or other industries that depend on consumers having excess income. Other fields are left mostly unscathed. Keep reading to see which jobs are recession-proof. 

Nurses

Since the Covid-19 pandemic began, the nationwide nursing shortage has only gotten worse. And as the Baby Boomer population ages, nurses will continue to be in high demand.

According to the Bureau of Labor Statistics, nurse practitioners have a 28% job growth rate and are one of the fastest growing fields in the country. Registered nurses have a 16% projected 10-year growth rate. 

Teachers

As the teaching industry continues to see huge shortages, current teachers can rest assured that their jobs are recession-proof. Even if individual districts consolidate and lay off teachers, it should be fairly easy for a teacher to find another job in a different district. 

Child-Care Workers

Nannies, daycare center employees and other child-care workers are in one the most in-demand industries. Many daycare centers closed during the Covid-19 pandemic, and almost every state reported a childcare worker shortage in 2021. As people return to the office, daycare centers continue to recruit new employees. According to the BLS, the 10-year job growth rate for childcare workers is 8%.

Accountants

Accountants are necessary for any business and can work in a variety of different industries. Even a struggling business still needs accountants. If you are laid off from an accounting job, it can be easier to find a new role in a different field. The BLS says that the 10-year job growth rate for accountants is 7%.

Physical and occupational therapists

Most healthcare-related jobs are recession-proof because the economy doesn’t have a strong impact on people’s need for medical care. And as the Baby Boomer population gets older, the need for both physical therapists and occupational therapists will continue to increase. 

The 10-year growth rate for physical therapists is 21%, while the rate for occupational therapists is 17%.

Physician assistants

Crossed between a doctor and a nurse, physician assistants are among the highest-paid healthcare professionals who don’t need a medical degree. They’re also in high demand, with a 31% job growth rate. 

Software engineers

It seems like software engineers have been in demand for decades, but that demand is still growing. While some tech companies have started layoffs, the overall 10-year job growth rate for software developers, quality control analysts and testers is 17%. 

Respiratory therapists

As Covid-19 created and exacerbated breathing problems in millions of people, the need for respiratory therapists has only become more dire. Between 2020 and 2030, the growth rate for respiratory therapists is 23%. You only need an associate’s degree to become a respiratory therapist. 

Veterinarians

During a recession, people still need vet care for their furry friends, so the demand for veterinarians doesn’t decrease. The BLS reports that the 10-year job growth rate is 17% for vets – much higher than the national average.

Social workers

The need for social workers doesn’t decrease during a recession, and in some cases, social workers become more vital as people’s finances dip. According to the BLS, social workers have a 12% growth rate. 

How to Recession Proof Your Job

Even if you don’t work in one of the industries mentioned above, there are ways to protect yourself from future layoffs.

If you’ve been working at the same company for years, your skills can stagnate. If you’ve been in your current role for a while, you should do some research and see if there are any skills you need to learn. 

Take a look and see if there are any classes you can take to refresh your resume. Your company may even reimburse you for these. You can also attend conferences to learn more about your industry and network with potential future employers.

Update your resume and LinkedIn profile if you haven’t done so in a while. Add your latest projects to your professional website or portfolio. Start scheduling coffee or lunch meetings with other people in the industry. 

Register for any local meetups or association meetings where you can meet more people. If you do get laid off, it will be easier to ask for help finding a job if you’ve already been planting the seeds for a few months.

If you can work on the side consulting or freelancing, that is also a good way to diversify your income and build new connections. This way, if you are laid off, you can increase that work or at least have something to do while you look for a new job.

Don’t start slacking at your current job, even if layoffs seem imminent. While being a hard-working employee won’t make you immune to layoffs, it will be easier to get a good reference letter or recommendation from your boss. They may also be more likely to recommend you for a position if you’ve been a good employee during all this time.

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As inflation continues to dominate the headlines, you may have started to hear about the concepts of shrinkflation, skimpflation and greedflation. These are subtle ways in which companies attempt to either minimize or take advantage of the impact that inflation has on consumer expectations.

It’s important to understand these concepts in order to avoid being manipulated. Let’s take a look at each one in a little more detail.

What is Shrinkflation?

The traditional concept of inflation refers to paying more than you would previously for the same item. The concept of shrinkflation refers to paying the same amount as you were before, but receiving a smaller size. 

For example, let’s say you paid $5 for an 18-ounce jar of peanut butter last year. But now, you’re paying $5 for a 15-ounce jar of peanut butter. While the final price hasn’t changed, you’re receiving less than you were before. 

Shrinkflation is often harder to spot than traditional inflation because it’s difficult to compare size changes unless you remember how much you used to get. If you don’t remember that a jar of peanut butter used to contain 18 ounces, you might not realize that you’re effectively paying more now.

What is Skimpflation?

Have you had a meal at a restaurant where the food wasn’t as good, but the prices were the same or higher? Have you bought an article of clothing only to discover the quality isn’t as good as it used to be? If so, you’ve definitely experienced skimplfation. 

Skimpflation can refer to businesses keeping prices the same, but downgrading the overall customer experience. For example, many businesses that offer free shipping have switched to longer processing and shipping times. Businesses will utilize skimpflation to avoid raising prices and losing customers while still meeting their revenue goals. 

What is Greedflation?

Even as crude oil prices have started to drop, many consumers have yet to see a dip in overall gas prices. This has caused some experts to accuse gas companies of “greedflation,” which refers to the practice of increasing prices even though underlying costs have not increased. 

Greedflation is a way for companies to take advantage of inflation and use it to increase their prices when they don’t actually need to do so. It can also refer to companies raising prices more than necessary to exploit their customers. Because consumers know that prices are rising due to external factors, they expect that companies will increase their rates. 

How to Combat All Types of Inflation

As inflation continues to be a powerful force in the economy, consumers need to know how to save money at any and every opportunity.

Compare prices

Not all businesses engage in the types of inflation mentioned above, but you’ll have to look closely to find companies that aren’t trying to exploit customers. 

Try to shop around as much as possible and compare prices from all businesses and services, from your hair salon to your mechanic. Always ask if there are any discounts or coupons available. 

Research costs beforehand

During periods of high inflation, businesses often raise prices without informing customers. You may not even discover a price increase until it’s time to pay.

To save money and watch out for various signs of inflation, you should research prices ahead of time. For example, if you’re planning an evening out, look at the online menus ahead of time so you know what to expect. 

Shop in bulk 

Buying in bulk from warehouse clubs can be an easy way to save money and fight inflation. To maximize your savings, only purchase items that will not go bad before you can use them. Canned items, frozen produce and dry goods will last longer than a two-pack of Greek yogurt or milk, for example. 

Some warehouse clubs have their own credit card that offers cash back when you shop, allowing you to save even more money. 

Also, many warehouse clubs sell gas for less than what you would pay at a regular gas station. You can fill up the tank while you stock up on groceries and get extra savings. Pharmacies at warehouse clubs like Costco often have lower prescription drug prices than drugstores, so you can get medicine for less as well.  

You can also shop in bulk at stores like Whole Foods, where they sell legumes, grains and spices in bulk. This lets you save money on packaging while only buying as much as you need.

Look at unit prices

If you’ve always compared item prices to determine which is cheaper, you should start using the per-unit price. The per-unit price divides the total cost by the amount, usually in ounces or grams. It’s the most accurate way to compare two different items.

You may be surprised with what you find when you start doing this. Most of the time, the larger item has a lower per-unit price than the smaller item. However, if the smaller item is on sale, then it may be cheaper.

Check the unit price every time you shop, even if you’re buying the same thing you did last week. You never know when prices might change. 

Utilize all possible discounts

These days, there are many ways you can pay less than retail price – but you have to be diligent and creative. 

Sign up for email newsletters to get discounts for new customers. Use browser extensions like Rakuten to find promo codes. Add an item to your cart and leave it; sometimes the company will email you with a special discount you can use.

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Labor Day, celebrated in the United States on the first Monday in September, is often considered the end of the summer season. As kids go back to school and the weather gets colder, it is common to celebrate with barbecues and other types of get-togethers. The Monday holiday means that many have a long weekend as well. If you are trying to stick to a budget but still want to celebrate Labor Day, here are a few ways to prepare and have fun on a budget.

Host a Potluck

If you have an annual tradition of a Labor Day cookout that you don’t want to break, there are a few things you can do to keep your tradition strong while trying to save some money. One idea is to make it a potluck. You can have all your guests bring a side dish or dessert, while you provide the main course. Depending on how many guests you are planning to host, you might consider organizing a signup so that you make sure that you’ll have a good variety of appetizers, side dishes, salads and desserts.

Another idea is to make the party BYOB (Bring Your Own Beverage). Drinks (especially alcohol) can add a ton to your overall costs. You can help to defray some of those costs by having everyone bring their own drinks. That way you won’t be responsible for providing every possible kind of drink. Plus this way everyone can make sure that they’ll have a drink that they enjoy.

Keep it Simple

A Labor Day party doesn’t have to be a huge extravaganza. While large parties featuring many friends and family are common, it’s not the only way to have fun. One idea to keep your Labor Day celebration on a budget is to keep it simple. Some people choose to relax at home or take a casual stroll through their city, using Labor Day as a chance to have a bit of a staycation while everyone else is at a barbecue. You can also use Labor Day as a chance to organize or catch up on home improvement projects around the house. 

If you do choose to still get together for Labor Day, you can choose to do something smaller with just your immediate family and/or close friends. A casual get together with some neighbors may be another option. The point is that while large parties with dozens or hundreds of people can be fun, they’re not the only way to have fun.

Visit the Great Outdoors

One way to keep things simple is to eschew a traditional backyard barbecue blowout in favor of outdoor fun. Depending on where you live, Labor Day can signal the end of summer and warm-weather activities. So rather than having a big cookout, consider celebrating the long weekend with a camping trip to a nearby State or National Park. 

There are many different outdoor activities that you could consider, depending on where you live or what types of things that you like to do. Hiking, creeking, white-water rafting and rock climbing are all possibilities. The best part about exploring nature is that you can do many of these activities for little or no charge.

Be Smart About Your Choice of Venue

If you are hosting a barbecue or other large celebration, you also can potentially save some money by being smart about your choice of venue. If you can’t (or don’t want to) make alternative plans, you still have a few different options. In the scenario where you’re just having a few people over, it would make sense to just do it at your own home (for free).

But if you’re planning a larger gathering, you may start running into costly reservation fees depending on the size of your group and where you’re planning to host. Here are a few potential ideas for places that can work for a group outing:

• Find a friend that has a large yard or home suitable for large gatherings
• Many city or state parks allow you to reserve park shelters for free or cheap 
• Churches may allow parishioners to use their meeting halls free of charge
• Some community groups have meeting rooms that are available to use or rent

The Bottom Line

Celebrated in the U.S. on the first Monday in September, Labor Day has often signified the end of the summer and the beginning of the school year and autumn. While there are many ways to celebrate, large get-togethers (or barbecues) are a common American tradition. If you are planning a Labor Day celebration but are looking to stick to your budget, don’t despair. Following some of these tips can help you have fun without running up your credit card bill. 

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From living in the dorms to meeting new people, many students eagerly await their chance to begin the college experience. And no matter your major, almost all college students have one thing in common — they know college can be expensive. So expensive, in fact, that over 43 million students are facing outstanding student loan debt.

Over the past 30 years, the average cost of college tuition has nearly tripled, causing many students to graduate with not only the freshman 15, but also student loan debt. So, just how bad is the student debt crisis? Take a look at these student loan debt statistics and see for yourself.

Average Student Loan Debt Statistics

When deciding whether or not to attend college, one of the main questions students may ask themselves is, “Can I afford college?” For some, this may be an easy question to answer. But millions of others rely on scholarships, grants, and, of course, student loans.

Here are some student loan facts and statistics to help you understand how student loan debt impacts those seeking higher education:

1. The average student loan debt per borrower is roughly $35,000. (Mint, 2022)

2. The median total student loan debt per borrower is around $17,000. (Mint, 2022)

3. Just under 35% of those in some type of debt have student loan debt. (Mint, 2022)

4. In 2022, the student debt total in the U.S. reached over $1.7 trillion. (Federal Reserve)

5. 6% of student loan borrowers owe over $100,000 in student loan debt.  (Brookings)

6. 3 in 10 adults have taken on debt to help pay for college. (Federal Reserve)

7. Student loan debt is the second largest type of consumer debt, second to mortgage debt. (Experian)

8. In the U.S., the outstanding value of student loan debt is greater than that of auto loan debt. (Federal Reserve)

9. Student loan debt has increased by nearly 76% in the past decade. (Federal Reserve)

Federal Student Loan Debt Statistics

To help pay for college, many students will borrow federal student loans. Over the past decade, federal student loan debt has increased nearly 70%.

Total Federal Student Loan Debt (2012-2022)

Here is a decade’s overview of the total federal student loan debt, according to Federal Student Aid:

And when it comes to federal student loans, there are many different loan types you can choose from. The most popular options are the Stafford Subsidized and Stafford Unsubsidized loans, which together make up over half of all federal student loans combined.

Federal Student Loan Portfolio (2022)

Here is a breakdown of the federal student loan portfolio according to Federal Student Aid:

To understand just how popular federal student loans are, check out the following statistics on student loan debt:

10. In 2020-21, students received nearly $84 billion in federal loans. (College Board)

11. Over 43 million Americans owe money for federal student loans. (Federal Student Aid)

12. In the past 30 years, student aid received through federal loans has increased by over 300%. (College Board)

Private Student Loan Debt Statistics

As an alternative, many borrowers instead choose to take out private loans, borrowing from banks, credit unions, and other private student loan lenders. To better understand private student loans and who uses them, read these helpful statistics:

13. 7.61% of outstanding student loans in the U.S. are private loans. (MeasureOne)

14. In 2020-21, private student loans from credit unions, private lenders, and banks reached nearly $12 billion. (College Board)

15. The total outstanding private student loan debt is estimated at $131.1 billion. (MeasureOne)

16. 89% of private student loans are used for undergraduate degrees. (MeasureOne)

Student Loan Forgiveness Statistics

Despite differing opinions on student loan forgiveness, some individuals have been able to get some if not all of their student loans forgiven thanks to the Public Service Loan Forgiveness (PSLF) program. The PSLF program offers debt forgiveness to those who agree to work full time for a qualifying employer and meet the PSLF requirements.

However, due to their complex eligibility requirements, very few people are eligible for debt forgiveness. To learn more about the state of student loan forgiveness, scroll through these statistics:

17. 41% of U.S. adults believe that at least some student debt should be forgiven. (YouGov)

18. 12,523 borrowers have successfully had their federal loan debt forgiven through the PSLF program as of May 2022. (Federal Student Aid)

19. As of May 2022, the PSLF program has forgiven over $1.2 billion in student debt. (Federal Student Aid)

20. The average amount of student loan debt forgiven through the PSLF program is over $97,000. (Federal Student Aid)

21. Only 2% of PSLF program applications qualify for student loan forgiveness. (Federal Student Aid)

Student Loan Repayment Statistics

With a monumental amount of outstanding federal student loan debt, you may wonder what exactly is going on with these loans. While everyone’s financial situation may be different, here are the common loan statuses of federal student loans according to Federal Student Aid:

As a result of the COVID-19 pandemic, many loans are currently in forbearance due to halted or cut payments.

Federal Student Loan Repayment Statistics (Direct Loan Program)

Here is the total outstanding debt and the total number of borrowers as of 2022 for each loan status according to Federal Student Aid:

Regardless of current loan status, many borrowers deal with repaying their student loans well after they leave college. To understand how student loan repayment affects borrowers, read through these stats:

22. 16% of Americans think they will never be able to pay off their student loans. (YouGov)  

23. 54% of those with student debt owe less than $20,000. (College Board)

24. 60% of college graduates with debt age 35 and under expect to pay off their student loans into their 40s. (Citizens Financial Group)

25. On average, it takes borrowers 21 years to pay off their student loans. (One Wisconsin Institute)

26. College graduates under the age of 35 spend nearly one-fifth of their current salaries on student loan payments. (Citizens Financial Group)

Student Debt Statistics by Demographics

Like many other things, student loan debt does not affect everybody equally. To better understand how different groups are affected by student debt, read through these statistics sorted by different demographics:

Student Loan Debt Statistics by Race

27. 57% of Black female college grads experience financial difficulties while repaying their student loans. (American Association of University Women)

28. Over two times as many Black students borrow federal student loans than Asian students. (National Center for Education Statistics)

29. On average, Black college students graduate with $7,400 more in student debt than their white peers. (Brookings) 

30. Nearly 20% more Black students take out federal student loans than white students. (National Center for Education Statistics)

31. Over 80% of Black bachelor’s degree recipients graduated with an average of $34,000 in student loan debt in 2016. (The Institute for College Access & Success)

32. Over 25% more Hispanic and Latino students use federal student loans than Asian students. (National Center for Education Statistics)

33. In 2016, 66% of Hispanic and Latino bachelor’s degree recipients graduated with student loan debt. (The Institute for College Access & Success)

34. Of Black graduates with bachelor’s degrees in 2016, only 14% did not take out student loans. (Postsecondary National Policy Institute)

35. Less than half of Asian bachelor’s degree recipients graduated with student loan debt in 2016. (The Institute for College Access & Success)

36. As of 2019, the average white male borrower has paid off 44% of his student loan balance 12 years after starting college, whereas the average Black female borrower saw her student loan balance increase by 13% in the same time period. (Demos)

37. Over 60% of white bachelor’s degree recipients graduated with student loan debt in 2016. (The Institute for College Access & Success)

Student Loan Debt Statistics by Age

Below you will find a breakdown of the total amount of outstanding debt and the total number of borrowers by age group according to Federal Student Aid:

38. Over $100 billion of the outstanding student loan debt is held by borrowers over age 62. (Federal Student Aid)

39. Nearly half a trillion dollars of the federal student loan debt is held by borrowers between the ages of 25 and 34. (Federal Student Aid)

40. More than one-third of adults under 30 have student loan debt. (Pew Research Center)

41. Nearly 85% of federal student loan borrowers are under 50. (Federal Student Aid)

42. Borrowers under the age of 24 owe over $100 billion in federal student loan debt. (Federal Student Aid)

Student Loan Debt Statistics by Degree Type

43. Undergraduate loans make up nearly 90% of the outstanding balance of private student loans. (MeasureOne)

44. Roughly 25% of student loan borrowers went to graduate school. (Brookings)

45. The average undergraduate student has $28,400 in student loan debt. (College Board)

46. 23% of bachelor’s degree recipients graduate with less than $20,000 in student loan debt. (Brookings)

47. On average, student loans make up 30% of the funds an undergraduate student uses to pay for college. (College Board)

48. 30% of bachelor’s degree holders graduate with no debt. (Brookings)

49. In 2020-21, federal student loans made up 65% of the total funding for graduate students. (College Board)

50. 48% of the total outstanding student loan debt can be attributed to loans associated with graduate degrees. (Brookings)

51. In 2020-21, 47% of federal student loans went to graduate students. (College Board)

Student Loan Debt Statistics by School Type

52. On average, private school students graduate with over $5,000 more in student debt than their public school counterparts. (Statista)

53. In the class of 2020, 57% of students graduating from private nonprofit four-year schools had student loan debt. (College Board)

54. Students from public institutions hold 43% of the total federal student loan debt. (Federal Student Aid) 

55. In the 2019-20 academic year, 68% of first-time students attending private for-profit institutions took out student loans. (National Center for Education Statistics)

56. Over $0.5 trillion of federal student loan debt is owed by borrowers who attended private institutions. (Federal Student Aid) 

57. In the 2019-20 academic year, over half of first-time students attending private nonprofit institutions took out student loans. (National Center for Education Statistics)

58. In the class of 2020, 55% of students graduating from public four-year schools had student loan debt. (College Board)

59. In the 2019-20 academic year, 42% of first-time students attending public institutions took out student loans. (National Center for Education Statistics)

Student Loan Debt Statistics by Gender

60. Women hold roughly two-thirds of U.S. student loan debt. (American Association of University Women)

61. On average, women hold $31,276 in student debt. (American Association of University Women) 

62. For women, the average monthly payment for student loans is $307 one year after college. (American Association of University Women)

63. One-third of women say that over 25% of their income goes toward paying off student loans. (Student Debt Crisis)

64. On average, women repay their college debt at a slower rate than men. (American Association of University Women)

65. Female college graduates are 1.1% more likely to reach loan default within four years after college than male college graduates. (American Association of University Women)

Student Loan Debt Statistics by State

Average Student Loan Debt by State (Class of 2020)

According to The Institute for College Access & Success, the average student loan debt is over $30,000 in 19 states. For a complete breakdown of the average student debt by state, follow the table below:

While some of these student loan debt statistics may make affording college seem impossible, there are many ways you can successfully navigate the student loan waters. From spending extra time saving for college to choosing a lower-cost university, you too can be on the way to paying off your student debt.

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FAQs About Student Loan Debt

With many students pursuing different types of loans, schools, and degrees, understanding student loan debt can be a tricky topic to wrap your head around. Below, you’ll find the answers to some of the most common student loan debt questions.

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