The Biden administration on Tuesday issued a final rule that makes it easier for employers to consider climate change and other so-called environment, social and governance factors when picking investment funds for their 401(k) plans.
The U.S. Department of Labor rule, which takes effect in 60 days, undoes regulations put in place during the Trump administration.
ESG investing is also known as sustainable or impact investing. There are many flavors of ESG funds; they may, for example, funnel investor money into wind and solar companies or those with diverse board members, or steer funds away from firms involved in fossil fuels.
ESG funds have grown more popular in recent years. Investors poured $69.2 billion into them in 2021, an annual record, according to Morningstar. Uptake in 401(k) plans has been slow, however.
The Inflation Reduction Act is expected to further bolster the popularity of ESG investing. The law, which President Joe Biden signed in August, represents the largest federal investment to fight climate change in U.S. history.
Employers have a legal duty to thoroughly assess funds’ risk and return when picking 401(k) plan investments; for example, they can’t subordinate the financial interests of workers in favor of a cause like climate change.
The new ESG rules don’t change these duties.
However, they clarify that businesses can “include the economic effects of climate change and other ESG considerations” when making investment choices — something Lisa Gomez, assistant secretary of labor for the Employee Benefits Security Administration, called “common sense.”
“While climate change is a critical issue, that’s not [just] what this rule is about,” Gomez said.
Employers also don’t violate their legal duty by taking workers’ ESG interests into account when crafting a lineup of 401(k) investment funds, according to the new rule; that may lead to more engagement among workers and therefore more retirement security, it said.
The Biden administration’s action Tuesday follows a March 2021 directive that it wouldn’t enforce the Trump-era rules. The administration then proposed a revision to those rules in October 2021; Tuesday’s action updates that proposal according to comments received from the public.
The new Biden regulations scrap certain elements of the Trump-era rules that Labor Department officials said stymied employers from using ESG funds.
For example, the prior rules didn’t explicitly mention ESG, and they required employers to choose investments based only on “pecuniary” factors — a term that essentially disallowed employers from selecting funds with any sort of “moral” component, Labor Department officials said.
The new Biden administration rules erase that requirement.
“Whether E, S or G, … direct or indirect, big or small, the [ESG] factor also furthers a moral component,” said a senior Labor Department official, who spoke on condition of background only. “ESG has an inherent duality of purpose.”
The new rules also erase a restriction that disallowed employers from using an ESG fund as a default option for workers automatically enrolled in their 401(k) plans — an increasingly popular avenue to boost retirement security. In legal parlance, these funds are known as a “qualified defined investment alternative,” or QDIA.
After applying for student loan forgiveness, some borrowers are receiving what looks like good news from the U.S. Department of Education.
“We reviewed your application and determined that you are eligible for loan relief under the Plan,” according to a letter sent out by Education Secretary Miguel A. Cardona.
Yet the notice goes on to say that “Unfortunately, a number of lawsuits have been filed challenging the program, which have blocked our ability to discharge your debt at present.”
Not long after President Joe Biden announced his sweeping plan to cancel up to $20,000 in student debt for millions of Americans, a number of conservative groups and Republican-backed states attacked the policy in the courts. Two of these lawsuits have been successful in at least temporarily halting the relief, and the Education Department closed its loan cancellation portal this month.
The Biden administration believes its plan is legal and will prevail in the courts, but for now, the financial future of millions of Americans remains uncertain.
Here’s what we know about the legal delays to the policy.
In a recent filing with the Supreme Court, the Biden administration warned that the legal battles over its forgiveness plan could drag into 2024 if the cases weren’t decided on an expedited basis.
However, such a long delay is unlikely, said higher-education expert Mark Kantrowitz.
He pointed out that the Education Department hopes its loan servicers will apply the relief to people’s accounts within two weeks after it gives it the green light to do so. That means if it’s allowed to continue forgiving student debt, it can act quickly and other legal challenges “will be rendered moot.”
Around 26 million borrowers have already applied for the forgiveness. Those who haven’t done so yet shouldn’t fret, Kantrowitz said. The government will just reopen its application portal again if its plan succeeds in the court.
The Biden administration is reported to be considering extending the payment pause on student loan bills yet again. That relief policy has been in effect since the start of the coronavirus pandemic.
It would be the eighth time borrowers have been given more time to pause payments, but it may be the White House’s only option with so much still in the air, experts say.
“Restarting repayment now will be messy because the Biden Administration has promised forgiveness to tens of millions of borrowers who will be upset about having to make payments on loans that they expected to be forgiven,” Kantrowitz said.
Indeed, a top official at the Education Department recently said student loan default rates could dramatically spike if its loan forgiveness plan is thwarted, “due to the ongoing confusion about what they owe.”
Those unnerved by the possibility of student loan forgiveness falling through may take some comfort in a number of other options that may offer help.
The Biden administration recently announced a new repayment plan for certain struggling borrowers that would cap monthly bills at 5% of their discretionary income. It should go into effect next July, Kantrowitz said. (Use one of the calculators at Studentaid.gov or Freestudentloanadvice.org to find the repayment plan most affordable for you.)
The Public Service Loan Forgiveness program, which allows those who work for the government and certain nonprofits to get their debt cleared after a decade, is also getting a number of improvements.
If you’re unemployed or dealing with another financial hardship, you can put in a request for an economic hardship or unemployment deferment. Those are the ideal ways to postpone your federal student loan payments, because interest doesn’t accrue under them.
If you don’t qualify for either, though, you can use a forbearance to continue suspending your bills. Just keep in mind that interest will rack up and your balance will be larger — possibly much larger — when you resume paying.
And for those in the most difficult situations, it may soon be easier to discharge your student debt in bankruptcy.
NEW YORK — Credit Karma is probably best known for giving Americans regular access to their credit scores, but the San Francisco-based company also acts as a starting place to shop for a loan, bank account or mortgage.
Roughly 76 million Americans have used Credit Karma, giving the company a broad view into Americans’ borrowing habits.
CEO Ken Lin spoke to The Associated Press about what financial products borrowers are still shopping for in this high inflation economy, as well as Americans’ spending habits.
The interview has been edited for length and clarity.
Q: What have you seen in credit card activity in recent months as Americans deal with high inflation and economic uncertainty?
A: Unemployment continues to be relatively low. What we’ve been seeing is a lot of origination happening in credit cards. The other unique phenomenon is while interest rates go up, the large banks are still trying to be competitive. They’re able to do a lot of lending in this environment. Consumer spending is going great. Americans still have historically lower credit card balances, and while they are building up those balances again, it’s still healthy.
Q: Mortgage rates have gone up considerably, and we have seen mortgage activity decrease. What are you seeing?
A: Most of the mortgage market is refinancing. Nobody is refinancing right now because the prevailing rate for many mortgages for so many years was 3% or 4%. Now we’re at 7%. You’re not really going refinance to get a higher rate.
What we have seen is a much larger number of people are going into home equity lines of credit or home equity loans. People are finding that more economical. Unless you’re really desperate, you’re not going to do a cash out refinance.
Q: Higher interest rates can mean higher yields on savings accounts, but banks for some time did not need additional deposits so they weren’t paying for them. Are they still dragging their heels?
A: I think this is an opportunity for most consumers to really be more cognizant, more thoughtful around their finances, because we assume when rates are going up, that the money in our savings accounts is going up, and that’s generally not the case. You really need to push your bank to offer you that higher yield, or even open a new account elsewhere.
Q: What are your thoughts on the growth of buy now, pay later loans?
A: I think it’s a little bit of a dangerous space. One of the nice things about the traditional credit industry is they are able to calculate and understand how much debt you have relative to the amount of income you earn. There’s no such visibility into buy now, pay later products. You can take out one loan with multiple companies and none of them would know, which I think makes it easy for borrowers to get in over their heads.
The Biden administration started notifying individuals who are approved for federal student loan relief on Saturday even as the future of that relief remains in limbo after lower courts blocked the program nationwide.
The Department of Education began sending emails to borrowers who have been approved to have their federal student loans relieved, explaining that recent legal challenges have kept the administration from discharging the debt.
“We reviewed your application and determined that you are eligible for loan relief under the Plan,” Education Secretary Miguel Cardona wrote in the e-mail, which was provided to CNN. “We have sent this approval on to your loan servicer. You do not need to take any further action.”
“Unfortunately, a number of lawsuits have been filed challenging the program, which have blocked our ability to discharge your debt at present. We believe strongly that the lawsuits are meritless, and the Department of Justice has appealed on our behalf,” Cardona added.
Cardona’s e-mail further explains the administration will “discharge your approved debt if and when we prevail in court” and promises to provide further updates.
The Biden administration has been unable to discharge any debt and stopped accepting applications due to the court rulings. About 26 million people applied for student loan relief prior to the recent court decisions with 16 million of those applications being approved, according to the Biden administration.
“President Biden is fighting to get millions of borrowers the relief they need and deserve,” White House spokesperson Abdullah Hasan said. “Some Republican officials and special interests are blocking that from happening. We’re making clear to student borrowers who is standing with them, and who isn’t.”
The Biden administration asked the Supreme Court on Friday to allow its student debt relief program to go into effect while the legal challenges continue to play out.
An “erroneous injunction” from a federal appeals court, Solicitor General Elizabeth Prelogar told the Supreme Court, “leaves millions of economically vulnerable borrowers in limbo, uncertain about the size of their debt and unable to make financial decisions with an accurate understanding of their future repayment obligations.”
Government lawyers say that President Joe Biden acted in order to address the financial harms of the pandemic and “smooth the transition to repayment” in order to provide targeted debt relief to certain federal student-loan borrowers affected by the pandemic.
The Supreme Court has asked the plaintiffs for a response by noon on Wednesday.
The Biden administration’s request comes as the 8th Circuit Court of Appeals earlier this week issued a nationwide injunction on the program following a challenge by Republican-led states, who argue that the student loan debt relief plan violates the separations of power and the Administrative Procedure Act, a federal law that governs the process by which federal agencies issue regulations.
This followed a ruling from a federal judge in Texas who declared the program illegal earlier this month.
Payments on federal student loans are set to resume in January after a years-long pause due to the pandemic.
When asked if the administration is considering extending the moratorium on student loan payments, White House press secretary Karine Jean-Pierre said the administration is “examining all options to provide middle-class families a little extra breathing room.”
The president last extended the freeze on federal student loan payments in August when he rolled out the sweeping student debt relief plan.
Personal loans are a common way to pay for large expenses like weddings, funerals and home renovations. In fact, personal loan balances are up 31% from last year, according to a TransUnion report. But they can also be used to float the costs of a major emergency or hardship. This is especially handy since sometimes these events can wind up being a lot more costly than we might expect and a basic emergency fund may not suffice.
This category of personal loans has unofficially become known as hardship personal loans. They’re regular personal loans that you can apply for when you just happen to be facing a hard time. And, there are some lenders out there that even cater to potential borrowers with lower credit scores.
Select rounded up some personal loan lenders you can apply to for funding during a difficult time. We looked at key factors like interest rates, fees, loan amounts and term lengths offered, plus other features including how your funds are distributed, autopay discounts, customer service and how fast you can get your funds. (Read more about our methodology below.)
Debt consolidation, credit card refinancing, home improvement, wedding, moving or medical
Loan amounts
Terms
Credit needed
Credit score of 300 on at least one credit report (but will accept applicants whose credit history is so insufficient they don’t have a credit score)
Origination fee
0% to 10% of the target amount
Early payoff penalty
Late fee
The greater of 5% of last amount due or $15, whichever is greater
Pros
Open to borrowers with fair credit (minimum 300 score)
Will accept applicants who have insufficient credit history and don’t have a credit score
No early payoff fees
99% of personal loan funds are sent the next business day after completing required paperwork before 5 p.m. Monday through Friday
Cons
High late fees
Origination fee of 0% to 10% of the target amount (automatically withheld from the loan before it’s delivered to you)
$10 fee to request paper copies of loan agreement (no fee for eSigned virtual copies)
Must have a Social Security number
Who’s this for?Upstart is ideal for individuals who don’t have a sufficient enough credit history to qualify for most other loans and forms of credit. This lender is also ideal for those who do have a credit score that’s on the lower end.
You can choose a three-year or five-year loan and borrow anywhere from $1,000 to $50,000. Plus, Upstart may be able to disburse your funds quickly. You can get your money as soon as the next business day if you accept the loan before 5 p.m. EST Monday through Friday.
One other major draw for Upstart is that this lender doesn’t charge any prepayment penalties. In other words, if you choose to pay off your loan early, you won’t be hit with a fee as a consequence.
Debt consolidation, major expenses, emergency costs
Loan amounts
Terms
Credit needed
Origination fee
Flat fee starting at $25 to $500 or percentage ranging from 1% to 10% (depends on your state)
Early payoff penalty
Late fee
Up to $30 per late payment or up to 15% (depends on your state)
Pros
Approves applicants with bad or fair credit
No early payoff fees
Reasonable loan minimums ($1,500) for smaller needs
Can pre-qualify with a soft credit check (no hard inquiry right away)
ACH funding within 1-2 business days (sometimes same day with proper paperwork)
Option to apply for secured loan (with collateral) for potentially lower rates
Borrowers can choose the date the bill is due each month
Applicants may apply with a co-applicant or, if married, may apply for a loan separately from spouse
Cons
High origination fee
High interest rates
No autopay APR discount
No co-signers
Information about OneMain Financial’s secured loans:
While not required, applicants who don’t qualify for an unsecured personal loan with OneMain Financial may be offered a secured loan. A secured loan lets borrowers who want to use the equity from their car potentially qualify for lower interest that way. Rates, repayment terms and agreements vary by individual and the state in which apply. Learn more by checking for offers on OneMain Financial’s site.
OneMain Financial link provided by Even Financial.
OneMain Financial consumer loans are offered in 44 states (we do not lend in AK, AR, CT, DC, MA, RI, and VT). Loan proceeds cannot be used for postsecondary educational expenses as defined by the CFPB’s Regulation Z such as college, university or vocational expense; for any business or commercial purpose; to purchase securities; or for gambling or illegal purposes.
Example loan: A $6,000 loan with a 24.99% APR that is repayable in 60 monthly installments would have monthly payments of $176.07.
Additional conditions for secured offers: Secured offers require a first lien on a motor vehicle that meets our value requirements, titled in your name with valid insurance. The lender places a lien on the collateral until the loan is paid in full. Active duty military, their spouse or dependents covered by the Military Lending Act may not pledge any vehicle as collateral.
Funding options; availability of funds: Loan proceeds may be disbursed by check or electronically deposited to the borrower’s bank account through the Automated Clearing House (ACH) or debit card (SpeedFunds) networks. ACH funds are available approximately 1 to 2 business days after the loan closing date. Funds through SpeedFunds can be accessed on the loan closing date by using a bank-issued debit card.
Borrowers in these states are subject to these minimum loan sizes: Alabama: $2,100. California: $3,000. Georgia: Unless you are a present customer, $3,100 minimum loan amount. Ohio: $2,000. Virginia: $2,600.
Borrowers (other than present customers) in these states are subject to these maximum unsecured loan sizes: North Carolina: $7,500.
Who’s this for? OneMain Financial is a good option for people who want different options when it comes to the length of the repayment period. Borrowers can choose between term lengths ranging from 24 to 60 months.
OneMain offers loan amounts ranging from $1,500 to $20,000 (this can vary by state). This lender also doesn’t charge any early payoff penalty fees. However, they do charge origination fees can either be a flat fee ranging from $25 to $500 or a percentage of the loan you’ve taken out, ranging from 1% to 10%, depending on your state. Late fees can cost up to $30 per late payment or 1.5% to 15% of the late amount of your last monthly payment.
And while most personal loans are unsecured, OneMain Financial offers borrowers the option of using collateral in order to receive better loan terms, like a lower interest rate.
Debt consolidation, major expenses, emergency costs, home improvements
Loan amounts
Terms
Credit needed
Origination fee
Early payoff penalty
Late fee
Up to $25 per late payment after 10-day grace period
Pros
Lends to applicants with scores lower than 600
No early payoff fees
Can pre-qualify with a soft credit check (no hard inquiry)
Quick funding (often by the next day)
Late payment grace period of 10 days
Cons
Origination fee
Potentially high interest (caps at 35.99% APR)
No autopay APR discount
No direct payments to creditors (for debt consolidation)
No co-signers
Who’s this for?Avant Personal Loans can be a good option for those who need money in a pinch. If you manage to be approved by 4:30 p.m. CT Monday through Friday, you can receive your funds as early as the next day. Of course, quick funding can also depend on whether or not you have submitted all the necessary information in a timely manner.
This lender also lets you check to see if you prequalify for the loan without harming your credit score. If your credit score isn’t great, you can still get approved since Avant looks at both your credit score and income.
You can borrow as little as $2,000 and as much as $35,000, and loan terms range from 24 to 60 months.
The origination fees range from 0% to 4.75% of the loan amount. Also, keep in mind that this lender charges a late fee of $25 if you don’t make your payment within ten days after the due date.
Debt consolidation, wedding, car repair, home renovations and more
Loan amounts
Terms
Credit needed
Origination fee
Origination or other fees from 0% to 7% may apply depending upon your state of residence
Early payoff penalty
Late fee
Currently, LendingPoint does not charge any late fees but reserves the right to assess late fees of up to $30. Fees vary by state.
Pros
Fast application with same-day approval
Possible next-day funding (after final documents are verified/approved)
May approve applicants with minimum 620 credit score
Allows soft inquiry to prequalify
No early payoff fees
Cons
Origination fees from 0% to 6%
Not available in Nevada or West Virginia
Must have a social security number
No joint or co-signed loans
Who’s eligible to apply for a LendingPoint loan:
You must be at least 18 years of age.
You must be able to provide a U.S. federal, state or local government issued photo ID.
You must have a social security number.
You must have a minimum annual income of $40,000 (from employment, retirement or some other source).
You must have a verifiable personal bank account in your name.
You must live in one of the states where LendingPoint does business (excludes Nevada and West Virginia).
Who’s this for?LendingPoint offers pre-qualification so you can check the terms of your potential loan without impacting your credit score. But the biggest appeal to LendingPoint is that this lender will inform you of the approval decision within seconds of applying. Generally, it will take one business day to receive the funds.
There is, however, a minimum annual income requirement of $35,000 in order to qualify to apply for the loan, and these loans are not available to residents of Nevada or West Virginia. When determining eligibility for a loan, LendingPoint considers credit score, loan term, credit usage, loan amount and other factors.
Loan amounts range from $2,000 to $36,500, and the length of the loan term can be anywhere from 24 to 72 months. The origination fees range from 0% to 7% of your total loan amount.
Here is how lenders classify “fair” and “poor” credit scores:
FICO Score
Very poor: 300 to 579
Fair: 580 to 669
Good: 670 to 739
Very good: 740 to 799
Excellent: 800 to 850
VantageScore
Very poor: 300 to 499
Poor: 500 to 600
Fair: 601 to 660
Good: 661 to 780
Excellent: 781 to 850
Scores lower than 670, and certainly scores lower than 600, will most likely disqualify you for the most affordable personal loans. But if you’re in a pinch, it’s not all-out impossible to get a loan with a credit score in the high 500s or low 600s.
Yes, it is possible to pre-qualify for a personal loan without hurting your credit score. Do some research before you apply. Read reviews and learn what to consider before agreeing to take on a loan. When you’re ready to apply, follow these steps to make sure you don’t ding your score too much.
Shop around for the best rate. Avoid hard inquiries by knowing your credit score before you submit a formal application so you know what you might qualify for. Many lenders will allow you to submit a prequalification form. Or consider using a lending platform (such as Upstart or LendingTree) to view multiple offers at once.
Decide on the best offer. Choose the loan with the best monthly payment and interest rate for your budget. Be sure to look at how much the loan will cost you over the full length of the term and decide if the cost is worth it.
Submit a formal application. Have your social security number on hand, as well as supporting documents such as bank statements and paystubs.
Wait for final approval. This could take just a few minutes, an hour or up to 10 days. To facilitate speedier approval, apply during normal business hours and submit the required documents right away.
Get your funds. Once your loan is approved, you’ll be asked to input your bank account information so the funds are deposited into your account. You may also be able to request a paper check from your lender, or in the case of a consolidation loan, you may be able to have funds sent right to your creditors.
Personal loans are a form of installment credit, which affect both your credit report and your credit score. Having both installment and revolving credit in your profile will strengthen your credit mix.
Having a diverse credit mix is helpful — but it’s not everything. Some say that adding a new installment loan, like a car loan or a mortgage, can boost your score, but there’s no sense in taking on debt (plus interest) unless you actually need it.
While a new installment loan might boost your score by strengthening your credit mix, a personal loan will only improve your credit over time if you can afford to make on-time payments. Late and missed payments show up as negative marks on your credit report.
While taking on an installment loan won’t boost your score a whole lot, using a personal loan to pay off credit card debt could increase in your credit score. Paying off a card will have a big impact on your credit utilization rate, which is a major factor in determining your credit score.
Once your cards are paid off, aim to keep your spending under 10% of your available credit. If you don’t take on more credit card debt and you pay your personal loan on time each month, you’ll see a noticeable improvement to your credit score.
A secured loan is a loan backed by collateral. The most common types of secured loans are mortgages and car loans, where the collateral is your home or car. But really, collateral can be any kind of financial asset you own. And if you don’t pay back your loan, the bank can seize your collateral as payment. A repossession stays on your credit report for up to seven years.
An unsecured loan requires no collateral, though you’re still charged interest and sometimes fees. Student loans, personal loans and credit cards are all examples of unsecured loans.
Since there’s no collateral, financial institutions give out unsecured loans based in large part on your credit score, income and history of repaying past debts. For this reason, unsecured loans may have higher interest rates (but not always) than secured loans.
When facing a financially difficult time, having a low credit score can often limit the options you have available to you, since you may not qualify for certain credit cards or other loans. However, some personal loan lenders that cater to lower credit scores may be able to provide some relief. Just keep in mind that with a lower credit score, you may be subject to higher interest rates.
To determine which hardship personal loans are the best for consumers with bad credit, Select analyzed dozens of U.S. personal loans offered by both online and brick-and-mortar banks, including large credit unions. When possible, we chose loans with no origination or sign-up fees, but we also included options for borrowers with lower credit scores on this list. Some of those options have origination fees.
When narrowing down and ranking the best personal loans, we focused on the following features:
Fixed-rate APR: Variable rates can go up and down over the lifetime of your loan. With a fixed rate APR, you lock in an interest rate for the duration of the loan’s term, which means your monthly payment won’t vary, making your budget easier to plan.
Flexible minimum and maximum loan amounts/terms: Each lender provides more than one financing option that you can customize based on your monthly budget and how long you need to pay back your loan.
No early payoff penalties: The lenders on our list do not charge borrowers for paying off loans early.
Streamlined application process: We considered whether lenders offered same-day approval decisions and a fast online application process.
Customer support: Every loan on our list provides customer service available via telephone, email or secure online messaging. We also opted for lenders with an online resource hub or advice center to help you educate yourself about the personal loan process and your finances.
Fund disbursement: The loans on our list deliver funds promptly through either electronic wire transfer to your checking account or in the form of a paper check. Some lenders (which we noted) offer the ability to pay your creditors directly.
Autopay discounts: We noted the lenders that reward you for enrolling in autopay by lowering your APR by 0.25% to 0.5%.
Creditor payment limits and loan sizes: The above lenders provide loans in an array of sizes, from $1,000 to $100,000. Each lender advertises its respective payment limits and loan sizes, and completing a preapproval process can give you an idea of what your interest rate and monthly payment would be for such an amount.
The rates and fee structures advertised for personal loans are subject to fluctuate in accordance with the Fed rate. However, once you accept your loan agreement, a fixed-rate APR will guarantee your interest rate and monthly payment will remain consistent throughout the entire term of the loan. Your APR, monthly payment and loan amount depend on your credit history and creditworthiness. To take out a loan, many lenders will conduct a hard credit inquiry and request a full application, which could require proof of income, identity verification, proof of address and more.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
It’s no secret that it’s a tough market for prospective home buyers.
In October, U.S. buyers needed to earn $107,281 to afford the median monthly mortgage payment of $2,682 for a “typical home,” Redfin reported this week.
That’s 45.6% higher than the $73,668 yearly income needed to cover the median mortgage payment 12 months ago, the report finds.
The primary reason is rising mortgage interest rates, said Melissa Cohn, regional vice president at William Raveis Mortgage. “The bottom line is mortgage rates have more than doubled since the beginning of the year,” she said.
Despite the sharp drop reported this week, the average interest rate for a 30-year fixed-rate mortgage of $647,200 or less was hovering below 7%, compared to under 3.50% at the beginning of January.
And while home values have softened in some markets, the average sales price is up from one year ago.
“Home prices have gone up substantially, mortgage rates have more than doubled and that’s just crushing affordability,” said Keith Gumbinger, vice president of mortgage website HSH.
Meanwhile, a higher cost of living is still cutting into Americans’ budgets, with annual inflation at 7.7% in October.
While the current conditions may feel bleak for buyers, experts say there are a few ways to reduce your monthly mortgage payment.
For example, a higher down payment means a smaller mortgage and lower monthly payments, Gumbinger explained. “More down in this sort of environment can definitely play a role in getting your mortgage cost under control,” he said.
Another option is an adjustable-rate mortgage, or ARM, which offers a lower initial interest rate compared to a fixed-rate mortgage. The rate later adjusts at a predetermined intervals to the market rate at that time.
An ARM may also be worth considering, as long as you understand the risks, Cohn said.
If you’re planning to stay in the home for several years, there’s a risk you won’t be able to refinance to a fixed-rate mortgage before the ARM adjusts, she said. And in a rising rate environment, it’s likely to adjust higher.
Your eligibility for a future refinance can change if your income declines or your home value drops. “That’s a greater risk, especially for a first-time homebuyer,” Cohn said.
Of course, home values and demand vary by location, which affects affordability, Gumbinger said. “Being patient and being opportunistic is a good strategy for market conditions like this,” he said.
U.S. President Joe Biden speaks about student loan debt at the White House on Aug. 24, 2022 in Washington, DC.
Alex Wong | Getty
The Biden administration on Friday asked the Supreme Court to reinstate its federal student loan program after a federal appeals court issued a nationwide injunction against the plan.
The administration’s request, which was previewed in another court filing Thursday, blasted the U.S. Court of Appeals for the 8th Circuit for blocking the debt relief plan. That injunction was issued earlier in response to a lawsuit by a group of Republican-controlled states.
“The Eighth Circuit’s erroneous injunction leaves millions of economically vulnerable borrowers in limbo, uncertain about the size of their debt and unable to make financial decisions with an accurate understanding of their future repayment obligations,” Solicitor General Elizabeth Prelogar wrote in Friday’s filing with the Supreme Court.
Prelogar also wrote that if the Supreme Court declines to vacate the injunction, it could consider the filing as a petition to the high court to hear the Biden’s administration appeal of the decision by the lower court.
And if the Supreme Court accepts the administration’s appeal, if could “set this case for expedited briefing and argument this Term,” she wrote. Keeping President Joe Biden‘s plan on hold while the appeal unfolds, Prelogar said, could keep borrowers in uncertainty about their debts until “sometime in 2024.”
Monday’s injunction by the 8th Circuit panel of three judges in St. Louis was the latest in a series of legal challenges to Biden’s plan to cancel up to $20,000 in student debt for millions of Americans.
In the case at issue in the 8th Circuit, another federal judge rejected the challenge to the debt relief program brought by the six states — Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina.
The judge ruled that while the states raised “important and significant challenges to the debt relief plan,” they ultimately lacked legal standing to pursue the case.
Standing refers to the idea that a person or entity will be affected by the action they seek to challenge in court.
The GOP-led states appealed after their lawsuit was denied.
The appeals panel ruled Monday that Missouri had shown a likely injury from the administration’s program, pointing out that a major loan servicer headquartered in the state, the Missouri Higher Education Loan Authority, or MOHELA, would lose revenue under the plan. Missouri’s state Treasury Department receives money from MOHELA.
A top official at the U.S. Department of Education recently warned that there could be a historic rise in student loan defaults if its forgiveness plan is not allowed to go through.
“These student loan borrowers had the reasonable expectation and belief that they would not have to make additional payments on their federal student loans,” U.S. Department of Education Undersecretary James Kvaal wrote in a court filing. “This belief may well stop them from making payments even if the Department is prevented from effectuating debt relief,” he wrote.
“Unless the Department is allowed to provide one-time student loan debt relief,” he went on, “we expect this group of borrowers to have higher loan default rates due to the ongoing confusion about what they owe.”
SHARM EL-SHEIKH, Egypt — Antigua and Barbuda’s environment minister says they have concerns about an EU proposal on loss and damage funding for countries vulnerable to climate change made late Thursday at U.N. climate talks.
Molwyn Joseph, who spoke on behalf of small island states, said there are parts of the EU’s offer that need “adjusting,” without adding more details.
“We will wait until we meet and bilaterally to discuss the areas of concern,” he said.
Joseph met Friday with German Foreign Minister Annalena Baerbock for talks on operationalizing loss and damage financing and said he will also hold separate talks later with China and the United States.
“We need an agreement at COP right now. That’s what we need, an agreement among all the parties,” Joseph said, adding there is a “strong possibility” to achieve an agreement on loss and damage funding by Saturday.
———
Dozens of nations spearheaded by island nation Vanuatu say they will seek an advisory opinion from the International Court of Justice on countries’ legal obligations to protect people who suffer from the impacts of climate change.
Vulnerable nations and other states, including New Zealand and the Alliance of Small Island States, supported the move.
“AOSIS will benefit greatly from this initiative … The moment of this advisory legal opinion is now,” said Antigua and Barbuda’s environment minister Molwyn Joseph, who spoke on behalf of small island sates.
Vanuatu environment and climate minister Ralph Regenvavu welcomed the growing coalition of nations in support of the move.
On U.N. climate talks, which are set to end today although likely to go into the weekend, Regenvavu said there was renewed hope following an EU proposal late Thursday night for a loss and damage fund.
“Overnight circumstances changed and we hope for a loss and damage deal today,” he said. “We are happy with the progress made so far.”
———
KEY DEVELOPMENTS:
— Crunch time for UN climate talks as Friday deadline looms
— EU shakes up climate talks with surprise disaster fund offer
— Confusion, finger-pointing, opposing views at Egypt’s COP27
— Politics, climate conspire as Tigris and Euphrates dwindle
———
German Foreign Minister Annalena Baerbock said Friday morning that the EU’s proposal late Thursday on a fund for vulnerable countries suffering the impacts of climate change was “a big step” in U.N. climate talks in Egypt.
The talks, set to end today but likely to go into the weekend, were buoyed by the EU offer that tied loss and damage funding for nations vulnerable to climate change with cuts to planet-warming gases.
Asked whether China will participate in such a loss and damage fund, Baerbock replied: “We are arguing massively for it.”
Baerbock said that “industrial nations carry responsibility for the past” and their wealth was built on using fossil energy. She added that “now we want to take our responsibility for the future together and that’s why we are arguing so much for countries such as China but also other big emitters also to participate in the future in supporting the weakest in the world together.”
But Baerbock did not think an agreement would could quickly.
“I packed my suitcase for the whole weekend,” she told German television.
———
EU climate chief Frans Timmermans said Friday that a proposal made by the bloc on funding for loss and damage and mitigation is “a final offer” that seeks to “find a compromise” between nations as negotiators seek a way forward at the U.N. climate talks in Egypt.
The EU Executive Vice President made a surprise offer late Thursday on tying compensation for climate disasters to tougher emissions cuts.
Timmermans said he was “encouraged” by immediate reaction to the proposal and more engagement on the offer is expected Friday.
“This is about not having a failure here,” said Timmermans. “We we cannot afford to have a failure. Now, if our steps forward are not reciprocated, then obviously there will be a failure. But I hope I hope we can avoid that.”
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Follow AP’s climate and environment coverage at https://apnews.com/hub/climate-and-environment
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Associated Press climate and environmental coverage receives support from several private foundations. See more about AP’s climate initiative here. The AP is solely responsible for all content.
NEW YORK — President Joe Biden’s plan to provide up to $20,000 in federal student loan forgiveness has been blocked by two federal courts, leaving millions of borrowers wondering what happens next. The administration plans to appeal. Here’s what to know if you’ve applied for relief:
WHAT HAPPENS NOW?
While the application for relief has been taken down from the Federal Student Aid website, applications that have already been filed are on hold while the appeal works its way through the courts.
“Courts have issued orders blocking our student debt relief program,” the Education Department said on its site. “As a result, at this time, we are not accepting applications. We are seeking to overturn those orders.”
A federal judge in Texas ruled that the plan overstepped the White House’s authority. Before that, a federal appeals court in St. Louis put the plan on temporary hold while it considers a challenge from six Republican-led states.
Still, advocates believe the administration will succeed in court.
“We’re really confident they’re going to find a way forward to cancel people’s debt,” said Katherine Welbeck at the Student Borrower Protection Center.
Experts say student loan forgiveness has the potential to end up before the Supreme Court, meaning this could be a lengthy process.
WHEN DO PAYMENTS RESUME?
Most people with student loan debt have not been required to make payments during the coronavirus pandemic, but payments are set to resume, along with the accrual of interest, in January.
Biden previously said the payment pause will not be extended again, but that was before the courts halted his plan. He’s now facing mounting pressure to continue the pause while the legal challenges to the program play out.
WHAT IF I ALREADY APPLIED FOR RELIEF?
More than 26 million people applied for cancellation over the course of less than a month, according to the Education Department. If you’re one of them, there’s nothing more you need to do right now.
About 16 million people already had their applications approved, according to the Biden administration. Yet because of court actions, none of the relief has actually been delivered.
The Education Department will “quickly process their relief once we prevail in court,” White House Press Secretary Karine Jean-Pierre said.
WHAT IF I HAVEN’T YET APPLIED FOR RELIEF?
For those who have not yet applied, the application for debt cancellation is no longer online. But there are still steps people can take to make sure their debt is canceled, should the appeal be successful, according to Welbeck.
“People should still check their eligibility,” she said. “As news changes, people should look out for updates from the Department of Education.”
You can sign up to receive the latest from the Federal Student Aid website here.
WHO QUALIFIES, SHOULD THE APPEAL SUCCEED?
The debt forgiveness plan announced in August would cancel $10,000 in student loan debt for those making less than $125,000 or households with less than $250,000 in income. Pell Grant recipients, who typically demonstrate more financial need, would get an additional $10,000 in debt forgiven, for a total of $20,000.
Borrowers qualify if their loans were disbursed before July 1.
About 43 million student loan borrowers are eligible for some debt forgiveness, with 20 million who could have their debt erased entirely, according to the administration.
ARE THERE OTHER PATHWAYS TO CANCELLATION?
For those who have worked for a government agency or a nonprofit organization, the Public Service Loan Forgiveness program offers cancellation after 10 years of regular payments, and some income-driven repayment plans cancel the remainder of a borrower’s debt after 20 to 25 years, according to Welbeck.
“Borrowers should make sure they’re signed up for the best income-driven repayment plan possible,” Welbeck said. In July, the administration will be reviewing and adjusting some of the accounts enrolled in these plans. You can find out more about those plans here.
Borrowers who have been defrauded by for-profit schools may also apply for borrower defense and receive relief on that account, Welbeck said.
SHOULD I RESUME PAYMENTS WHEN THE PAYMENT PAUSE IS LIFTED?
Advocates, including the Student Borrower Protection Center, are still urging the president to extend the pandemic-era payment freeze, arguing that students are entitled to the promised cancellation before the January repayment date arrives.
That said, Welbeck recommends logging on to your account, making sure you know who your servicer is, your due date, and whether you’re enrolled in the best income-driven repayment plan, as you resume making payments.
The Student Borrower Protection Center is holding regular webinars on how to follow the changing policy in the coming months. You can sign up for those here.
If your budget doesn’t allow you to resume payments, it’s important to know how to navigate the possibility of default and delinquency on a student loan. You can read more about those here. Both can hurt your credit rating, which would make you ineligible for additional aid.
If you’re in a short-term financial bind, you may qualify for a deferment or a forbearance. With either of these options, you can talk to your servicer about ways to temporarily suspend your payments. You can learn more about those options here.
Yes. The issue of debt forgiveness is now before the courts.
The administration is not saying whether or not it’s exploring other options for canceling debt if it loses its appeals. But advocates point to other ways the debt might be forgiven, including through the Higher Education Act.
HOW DO I PREPARE FOR STUDENT LOAN PAYMENTS TO RESTART?
Betsy Mayotte, President of the Institute of Student Loan Advisors, encourages people not to make any payments until the pause has ended.
“I’ve been telling people to pretend they’re paying their student loan, but to put it into an interest-bearing account for now if you’re able,” she said. “Then you’ve maintained the habit of making the payment, but earning a little bit of interest as well. There’s no reason to send that money to the student loans until the last minute of the zero percent interest rate.”
Mayotte recommends that borrowers use the loan simulator tool at StudentAid.gov or the one on TISLA’s website to find the repayment course that best fits their needs. Once you plug in your information, it tells you what your monthly payment would be under each available plan, as well as what the long-term costs amount to.
“I really want to emphasize the long-term,” Mayotte said. “Oftentimes I see people who might be having a financial struggle. They’ll find a lower monthly repayment option, and then, ‘Set it and forget it.’”
Mayotte encourages people to switch to higher payments if their financial situation stabilizes, so the loan doesn’t end up costing more in the long run.
Other useful tips that can shave costs for borrowers:
— If you sign up for automatic payments, the servicer takes a quarter of a percent off your interest rate, according to Mayotte.
— Income-driven repayment plans aren’t right for everyone. That said, if you know you will eventually qualify for forgiveness under the Public Service Loan Forgiveness Program, it makes sense to make the lowest monthly payments possible, as the remainder of your debt will be cancelled once that decade of payments is complete.
— Re-evaluate your monthly student loan repayment at tax time, when you already have all your financial information in front of you. “Can you afford to increase it? Or do you need to decrease it?” Mayotte said. “Always look at your long-term student loan management strategy.”
— Break up payments into whatever ways work best for you, whether that means two installments during the month, so it’s not a large lump sum at the end or the beginning, or setting aside cash in envelopes for designated purposes.
“Even if it’s an extra $5 or $20 a month, that’s a good strategy,” Mayotte said. “If they can afford to pay a little more per month — the more you pay and faster you pay, the less you’ll pay in the long run.”
Mayotte gave one example of a borrower with debt from higher education in the six figures. She was recently married, and she and her husband and kids decided to save every five dollar bill in a cookie jar to go towards the loans.
“That added up to a few more hundred dollars each quarter,” Mayotte said. “Everybody has a different financial personality. There are those who are really good at budgets. There are people who need to play games and trick themselves. And people shouldn’t judge each other people’s financial personalities.”
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The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.
Opinions expressed by Entrepreneur contributors are their own.
Imagine you put on an old coat you haven’t worn in a while and, to your surprise, you find a crumpled $20 bill in your pocket. How good does it feel? Do you go up half a notch on a one-to-ten mood scale, or maybe a full-notch?
Let’s imagine a different scenario. You’re doing the laundry, take out a just-washed pair of pants, and discover you forgot a $20 bill in the pocket — which has been completely ruined. What does that do to your mood on a one-to-ten scale?
If you’re like most people, you feel much worse about losing $20 than about gaining $20. That tendency is called loss aversion, one among many dangerous judgment errors that behavioral scientists call cognitive biases. The mental blindspot called loss aversion is one of the most fundamental insights of a field of behavioral science called prospect theory in the last few decades.
Loss aversion is one of the three key reasons why our minds get sucked — and suckered — into Black Friday and Cyber Monday sales. Retailers know that our intuitive reaction is to avoid losses, with research showing this drive might be up to twice as powerful as the desire to make gains. By offering short-term sales, available only on Black Friday or Cyber Monday, they tap into our deep intuition to protect ourselves from the loss of the opportunity represented by the sale.
Similarly, loss aversion helps explain why so many marketing techniques involve trial periods and free returns. Retailers know that once you buy something, you’ll be averse to losing it.
In a classic research study illustrating this tendency, participants were divided into two groups: one was given a chocolate bar and the other a mug. Then, they were offered the chance to trade what they had for the other object. Of the students given the mug first, only 11% chose to trade it for the chocolate bar, and only 10% of the students who got the chocolate first exchanged it for the mug.
We want whatever we have and are reluctant to lose it — such as an opportunity to buy something at a lower price during a short time period during Black Friday or Cyber Monday sales. In fact, behavioral scientists have a special term for people putting excessive value and being reluctant to give up whatever they have: the endowment effect, a specific form of loss aversion.
Let’s imagine a different scenario. It’s Cyber Monday, and you decided to check out the deals on an e-commerce website. You feel confident you’ll only get one or two of the best deals. But once you visit the website, you’re hooked. All those deals look great. The discounted prices are too good to pass up. So you end up taking advantage of a bunch of deals and purchase much more than you intended to in the first place.
Why did that happen? Why couldn’t you control yourself? It’s due to a cognitive bias called the restraint bias. We substantially overestimate the extent to which we can restrain our impulses. In other words, we have less self-control and weaker willpower than we like to think we do.
That’s why so many people overeat at buffet restaurants. If we had good self-control, buffet restaurants would be great: We could get whatever we want at a cheaper price than ordinary restaurants. Yet the problem is that we overestimate our ability to control our impulsive desire to take more food, and loss aversion causes us to try to avoid losing the opportunity to take the wide variety of food available at buffets.
Black Friday and Cyber Monday are the shopping equivalent of buffet restaurants. So many tempting deals around, with loss aversion driving us to not want to lose out, all resulting in shopping much more than we wanted.
The final key psychological reason why you get sucked into Black Friday and Cyber Monday sales explains why you’re reading articles like this one. Here’s the thing: The abundance of news stories, advertisements and social media posts around Black Friday and Cyber Monday makes it seem like everyone is thinking about sales on those days and looking for good deals.
As a consequence, our minds drive us to jump on the bandwagon of getting into Black Friday and Cyber Monday sales, a tendency that scientists call the bandwagon effect. When we perceive other people aligning around something, we are predisposed to join them. After all, they wouldn’t be doing it if it wasn’t a good idea, right?
Loss aversion, restraint bias, and the bandwagon effect are mental blindspots that impact decision-making in all life areas, ranging from the future of work to mental fitness. Fortunately, recent research has shown effective and pragmatic strategies to defeat these dangerous judgment errors, such as by using decision aids to constrain our shopping choices.
A useful strategy for Black Friday and Cyber Monday involves deciding in advance the purchases you’d like to make if they are on sale and buying them online instead of in the store. For example, you might decide to buy a certain laptop if it’s more than 20% off or a specific big-screen TV if it’s 30% off. Save the website pages of the laptop or TV that you want to buy, and then visit them on Black Friday and Cyber Monday to see if they’re on sale. If they’re not, be disciplined, and don’t buy something else, as you’re likely to get stuck buying much more than you wanted, and some deals are actually too good to be true. Instead, wait for the Christmas sale.
If you’re an entrepreneur who sells products, consider whether you can take advantage of loss aversion, restraint bias, and bandwagon effect among your customers, whether on Black Friday and Cyber Monday or throughout the year. Alternatively, consider sharing this article with your employees to help them make smart decisions this holiday shopping season.
Stocks and bonds have been turning in volatile, bearish performances this year in an economy marked by high inflation and rising interest rates. But that hasn’t deterred most retirement savers, especially the youngest ones.
401(k) participants have held relatively steady in their savings contribution rates and in their portfolio allocations, according to new third quarter data from Fidelity Investments. And GenZers have actually increased their contributions.
By the end of the third quarter, the S&P 500 was down 25% for the year. The Nasdaq had fallen 33%. And the S&P US aggregate bond index was off about 13%.
So it’s not surprising that the average 401(k) account balance fell to $97,200 in the third quarter, according to Fidelity, one of the country’s leading providers of workplace retirement plans. That’s down 6% from the second quarter and 23% from a year earlier.
Butthe average savings rate among 401(k) participants, meanwhile, held relatively steady at 13.8%, which includes both employee and employer contributions. That’s only down a fraction from the 13.9% recorded in the second quarter and the 14% recorded in the first quarter.
Meanwhile GenZers in the workplace – those roughly ages 22 to 25 – increased their savings levels from 10% to 10.3%. That may account for why the youngest generation of today’s employees actually saw their account balances increase 1.2% relative to the second quarter, despite terrible market performance.
In terms of gender differences, men saved a bit more than women (14.5% versus 13.5%). And age wise, Boomers on the cusp of retirement saved the most (16.5%).
Allocations also held fairly steady, Fidelity found, with only 4.5% of 401(k) and 403(b) plan participants opting to make a change in the third quarter. The majority of those who did made just one change, and only 29% of them opted for a more conservative investment.
Despite the volatility in the markets and the economy this year, “Retirement savers have wisely chosen to avoid the drama and continue making smart choices for the long-term,” said Kevin Barry, president of Workplace Investing at Fidelity Investments.
In unpredictable times like these, flexibility is key, especially when it comes to borrowing money for the things we need most. In a pinch, personal loans can be used to cover any number of things, whether it’s wedding expenses, surprise medical bills, major home repairs or funeral costs.
Debt consolidation can be an especially strategic way to use them, too, since the process allows borrowers to better organize their debts and typically involves a lender sending funds to creditors on your behalf. Consolidating debt through a personal loan also lets borrowers receive a lower interest rate while they pay back the loan, resulting in significant money being saved over the life of the loan.
The report pointed to increasing annual percentage rates, or APRs, coinciding with interest rate hikes by the Federal Reserve as the major reason behind the recent spikes.
Below, Select details what you can do if you’re interested in taking out a personal loan for the purpose of debt consolidation.
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Before applying for a personal loan, you’ll want to double-check your credit score. While there are several lenders, such as Upstart and OneMain Financial, that will still consider borrowers with low credit scores or an insufficient credit history, you might end up having to pay a higher interest rate — those with higher credit scores, however, will typically have to pay a lower interest rate.
Debt consolidation, major expenses, emergency costs
Loan amounts
Terms
Credit needed
Origination fee
Flat fee starting at $25 to $onem00 or percentage ranging from 1% to 10% (depends on your state)
Early payoff penalty
Late fee
Up to $30 per late payment or up to 15% (depends on your state)
Click here to see if you prequalify for a personal loan offer. Terms apply.
Next, you’ll want to figure out how much money you actually need to borrow. If you’re consolidating debt, simply add up all your balances to find a total.
While the smallest personal loan amounts — from a lender such as PenFed Credit Union, for instance — tend to begin around $600, minimum amounts closer to the $1,000 mark are often more common. Be careful not to apply for more than you need since you’ll have to pay all the money back eventually.
Debt consolidation, home improvement, medical expenses, auto financing and more
Loan amounts
Terms
Credit needed
Origination fee
Early payoff penalty
Late fee
Then, you’ll want to do your homework by researching and comparing the rates, fees and terms of different personal loan providers. Some lenders will allow you to check your rate without hurting your credit score before you even apply.
Ideally, you’ll want to go with a lender that offers a low interest rate with no fees (or the fewest fees) and a term length that best fits your budget. LightStream and Marcus by Goldman Sachs are each known for offering personal loans with no origination fees, late fees or early payoff fees.
Debt consolidation, home improvement, wedding, moving and relocation or vacation
Loan amounts
Terms
Credit needed
Origination fee
Early payoff penalty
Late fee
When you decide which lender you want to go with, submit your application and wait for approval, which can take anywhere from one to a few days. After that, just wait for the funds to be paid.
With debt consolidation, lenders will typically disburse the money directly to as many as 10 of your chosen creditors — you’ll just need to provide their information and how much money each one should be sent. That way, you’ll just be on the hook for paying back your personal loan lender.
If you’ve noticed the APR on your debts rising as interest rates have kept creeping up, consolidating your debt can be a smart and strategic way to lower it while also organizing the money you owe into one monthly payment.
Before you apply for a debt consolidation loan, make sure your credit score is as healthy as possible, as this is the key to helping you get approved for the lowest interest rates available.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
Billionaire Jeff Bezos, who founded the e-retail behemoth Amazon, has some spending tips as Americans gear up for a holiday shopping season — amid four-decade high inflation and recession worries.
Here’s what he said:
“‘If you’re an individual and you’re thinking about buying a large-screen TV, maybe slow that down, keep that cash, see what happens. Same thing with a refrigerator, a new car, whatever. Just take some risk off the table.’”
Why did Bezos offer the tip for consumers and small business to go easy on big-ticket items? He gave one big reason.
“If we’re not in a recession right now, we’re likely to be in one very soon,” he said in the interview, picking up on his cautionary tweet last month that “the probabilities in this economy tell you to batten down the hatches.”
Bezos is currently executive chair at Amazon AMZN, -2.34%,
transitioning to the role last year as Andy Jassy took the reins as CEO.
“Critics have taken aim at these words of thrift coming from a man — now worth approximately $120 billion — who built Amazon into the online shopping bonanza.”
To be sure, Bezos is not alone is his worries about a potential recession as the Federal Reserve and other central banks fight higher costs by hiking interest rates.
But his advice prompted some guffaws on social media. In a nutshell, critics say these are words of thrift coming from a man — now worth approximately $120 billion — who built Amazon into the online shopping bonanza that lets consumers seamlessly spend money.
As Joshua Becker, a proponent of minimalism wrote on Twitter: “I didn’t hear him mention refraining from Amazon’s Prime Day deals or Black Friday offers, but I recommend adding those items to your list as well.”
Regardless of how anyone feels about hearing spending advice, particularly from one of the world’s richest people, there are some things to consider as events like Black Friday and Cyber Monday approach.
For one thing, maybe there are discretionary expenses where people can cut back. Many Americans are still spending briskly, as Walmart WMT, -0.34%
third-quarter earnings and October’s retail-sales numbers recently affirmed. Holiday-spending projections paint the same picture.
Americans will spend between $942.6 billion and $960.4 billion on holiday-season sales this year, according to projections from the National Retail Federation. Last year’s holiday sales totaled $889.3 billion, the trade association said.
“During the third quarter, Americans’ credit-card balances climbed to $930 billion, the biggest annual increase in more than 20 years, according to the National Retail Federation.”
But Americans are planning for the holidays while credit-card balances are increasing — likely because credit cards are helping them keep up with rising costs.
During the third quarter, Americans’ credit-card balances climbed to $930 billion, the biggest annual increase in more than 20 years, according to Federal Reserve Bank of New York data.
While balances grow, so do credit-card interest rates. The annual percentage rate (APR) on new credit-card offers averaged 19.14% in mid-November, according to Bankrate.com. That beats the old record on APRs for new cards, set at 19% three decades ago.
The holiday shopping season is typically when Americans accumulate credit-card debt, pay the debts in the early part of the coming year and repeat the holiday-season debt the following year.
This year, the stakes could be higher if high credit-card bills arrive and a recession-induced job loss follows.
“It’s not the time to overspend and have a problem with paying your bills later,” Michele Raneri, vice president of financial services research and consulting at TransUnion TRU, -4.94%,
one of the country’s three major credit bureaus, previously told MarketWatch. “We know the economy is sending mixed messages.”
Opinions expressed by Entrepreneur contributors are their own.
It’s no secret that the world of work is changing. With the advent of new technologies, such as virtual reality and the metaverse, many traditional jobs are disappearing and being replaced by new ones. In this article, we’ll explore five professions anyone can enter in the metaverse without any prior experience.
It’s likely that your kids already spend time in the metaverse, and by taking on one or more of these five lesser-known metaverse jobs, there’s a good chance that their wealth could grow tremendously. Below I’ll discuss what these jobs entail and how money can be made with each one:
With metaverse property sales topping more than $500 million in 2021, it’s no surprise that becoming a real estate agent is one of the best ways to make money in the metaverse. If you want to make it big in metaverse real estate, you’ll want to find virtual spaces that are in demand that you can eventually sell to clients who have extra cash on hand.
For example, the Sandbox Metaverse may be a great starting point for beginners. Celebrities such as Paris Hilton and Snoop Dogg have already purchased property here, which has attracted a lot of attention from the media and fans who are willing to pay thousands to live near someone famous.
As a real estate agent, you’ll be responsible for finding good properties and presenting them to potential investors. You can find clients on Discord servers or crypto-related subreddits, and you can pitch and sell your properties using public presentations or direct messages. With the right approach, you can earn a high income by selling metaverse real estate.
As a connector, you will be responsible for seeking out the best potential game projects on the Roblox forum and connecting these creators with investors willing to invest money into them in exchange for a share in the project. You can find these investors on websites like Kickstarter and Indiegogo or by networking with people in the metaverse community who have extra cash to spend. Once you’ve sealed the deal, you’ll earn a commission for making the connection.
3. 3D modeler
The metaverse is a digital universe that is growing exponentially. And as it grows, the demand for 3D assets also increases. This presents a unique opportunity for those with the skills to create 3D models. With the right tools and a little practice, anyone can become a 3D modeler and start earning money by selling their creations. You can make hundreds of dollars from selling one model.
A great way to begin your journey if you’ve never created a 3D model is to practice in the Shapeyard app. This simple tool will allow you to create 3D models that can be exported and sold in the metaverse. Once you’ve mastered the basics of 3D modeling, you can begin selling your creations on marketplaces such as ArtStation, Turbosquid, and Sketchfab. With tons of potential buyers in the metaverse space, from Roblox game developers to property owners in the Decentraland platform, the opportunities are endless for 3D modelers.
While the hype around NFTs has drastically declined, the market for trading 3D gaming assets is still growing exponentially. You may be wondering if a virtual weapon could even be worth anything. The answer is a resounding yes! In fact, a CSGO knife costs more than $1.5 million.
However, you’ve got to be a visionary if you want to make money in this space. You need to be able to identify which 3D assets will increase in value over time and purchase them at a low price so you can sell them for a profit later.
To get started, find a concrete meta space, spend time there, and really take the time to understand and integrate into the community to find truly valuable objects. Then, when you’re ready to buy and sell 3D models, you can use in-systems marketplaces like Roblox Items. If you want to trade in many gaming metaverses at once, try trading platforms such as DMarket or Traderie.
5. Metfluencer
In the metaverse, becoming a rich and famous influencer isn’t hard if you have talent. In fact, one of the most influential people in Roblox, Albert Spencer Aretz, otherwise known as Flamingo, is said to be making more than $20 million annually. So, how does he do it? Simply by making funny Youtube videos where he plays Roblox, earning him both ad revenue and donations from his fans.
Do you want your success story to be similar? To get started, you’ll want to identify a metaspace that isn’t overcrowded, explore it, and begin writing scripts to create your own gameplay videos. As the audience of that metaverse grows, you’ll become one of the early influencers in this space. However, you will need to be patient and shoot consistent videos until you go viral. Once you do, you could be on your way to earning tens of thousands of dollars.
As you can see, there are many ways to make money in the metaverse. Whether you’re a 3D modeler, trader or metfluencer, there’s ample opportunity to earn a good living by creating and selling virtual assets. By following the tips in this article, your kids could be on their way to becoming metaverse millionaires.
The numbers: Construction on new houses fell 4.2% in October as high mortgage rates put off buyers and forced builders to scale back, a situation that’s likely to continue through 2023.
U.S. housing starts slowed to an annual pace of 1.43 million last month from 1.49 million in September. That figure reflects how many homes would be built in 2022 if construction took place at same rate over the entire year as it did in October.
Economists polled by MarketWatch had expected housing starts to register a rate of 1.41 million after adjusting for the typical seasonal swings in demand.
New construction hit a record 1.8 million in April before tapering off.
The number of permits, meanwhile, slipped 2.4% to a rate of 1.53 million, down sharply from a record 1.9 million last December.
Permits foreshadow how many houses are likely to be built in the months ahead, assuming a stable real estate market. But a major increase in mortgage rates this year has depressed demand and forced builders to scale back plans.
Key details: Single-family home construction fell 6.1% to an annual rate of 855,000 in October. Projects with five units or more registered a 556,000 rate, little changed from the prior month.
Housing starts are down 9% from a year ago, when mortgage rates briefly dipped below 3%.
Permits have fallen 10% from a year earlier.
Big picture: The highest mortgage rates in several decades have stifled new construction and are likely to do so through the next year or longer. The rate on a 30-year fixed mortgage recently topped 7%, more than double the rate a year ago.
While the U.S. has an acute need for more housing, fewer people can now afford to buy a home. Home prices are starting to come off record highs, but not by much.
Looking ahead: “Higher mortgage rates continue to exact a heavy toll on new construction,” said Richard Moody, chief economist of Regions Financial.
Market reaction:The Dow Jones Industrial Average DJIA, -0.18%
and S&P 500 SPX, -1.01%
fell in Thursday trades.
Student loan borrowers gather near The White House to tell President Biden to cancel student debt on May 12, 2020.
Paul Morigi | Getty Images Entertainment | Getty Images
Student loan default rates could dramatically spike if the Biden administration’s loan forgiveness plan is blocked, a top official for the U.S. Department of Education said in a new court filing.
The warning came as the Department of Justice asked a federal judge in Texas to stay an order that has temporarily blocked the Biden administration’s debt relief program.
“Unless the [Education] Department is allowed to provide debt relief, we anticipate there could be an historically large increase in the amount of federal student loan delinquency and defaults as a result of the COVID-19 pandemic,” Education Department Under Secretary James Kvaal said in the filing.
“This could result in one of the harms that the one-time student loan debt relief program was intended to avoid.”
In an economy that has produced the highest inflation rate since the early 1980s, Americans are struggling to keep up with day-to-day expenses.
More consumers are now relying on credit cards to get by, which has helped propel total credit card debt to $930 billion in the third quarter, just shy of the all-time record, according to a new report from the Federal Reserve Bank of New York.
Credit card balances climbed more than 15% from a year earlier, the largest annual jump in more than 20 years.
“With prices more than 8% higher than they were a year ago, it is perhaps unsurprising that balances are increasing,” the Fed researchers wrote in a blog post. “The real test, of course, will be to follow whether these borrowers will be able to continue to make the payments on their credit cards.”
Meanwhile, “high inflation and high interest rates are making it harder than ever to pay down credit card debt,” said Ted Rossman, senior industry analyst for CreditCards.com.
Not only are credit card balances back to pre-pandemic levels, but consumers are also carrying balances for long periods.
Among Americans who carry credit card debt from month to month, 60% have been in credit card debt for at least a year, according to CreditCards.com.
High inflation and high interest rates are making it harder than ever to pay down credit card debt.
Ted Rossman
senior industry analyst for CreditCards.com
Since most credit cards have a variable rate, there’s a direct connection to the Fed’s benchmark. As the federal funds rate rises, the prime rate does, too, and credit card rates follow suit. Cardholders usually see the impact within a billing cycle or two.
Already, credit card rates are roughly 19% — an all-time high — up from 16% earlier in the year.
Further, those rates will continue to rise since the central bank has indicated even more increases are coming until inflation shows clear signs of a pullback.
The best thing you can do now is pay down high-interest debt with a 0% balance transfer card, Rossman advised. Otherwise, consolidate and pay down credit cards with a lower-interest personal loan, he said.
How much money you need to earn to cover expenses and save for the future comes down to understanding your net worth and your goals, according to Paul Deer, a Boulder, Colorado-based certified financial planner and vice president of advisory service at Personal Capital.
Your net worth is essentially the sum of all of your assets — including cash, retirement accounts, college savings, house, cars, investment properties and valuables such as art and jewelry — minus any liabilities, or long-term debt, such as a mortgage, student loans, revolving credit card balances and any other personal loans.
“First and foremost, is your net worth growing or shrinking over time?” Deer said. If your net worth has been declining, it’s important to work on saving more and spending less.
From there, consider the milestones you want to achieve going forward, Deer said, whether that’s retiring, buying a home or paying for your child’s or grandchild’s education.
“Laying those out can really help provide clarity over what you should be prioritizing today.”
Most people agree that they need to cut costs to build up their savings, and yet reports show consumers haven’t pulled back on food, entertainment or travel.
Opinions expressed by Entrepreneur contributors are their own.
When I left my job as a consultant in October 2021, I had never made more than $5,000 per month from my business.
Courtesy of Clo Bare Money Coach
In fact, when I made a plan to leave my 9 to 5, I had an honest conversation with myself about whether or not I was okay with the possibility of only making $60,000 per year as a money coach — less than half what I was paid at my consulting gig.
And my answer? Absolutely.
As a 31-year-old millennial who graduated college with around $80,000 of debt for a degree in English and Spanish, I never would’ve dreamed I’d be able to someday consider taking a pay cut to quit my job and go full-time with my business. In fact, prior to 2018, I was still living paycheck to paycheck, knew nothing about investing and assumed I’d work the rest of my life.
You see, I grew up believing I was just “bad with money,” like it was some character flaw you were either born with or without. I’d seen my parents struggle with credit card debt, furloughs during the Great Recession and the unending stress of living paycheck to paycheck while raising five kids. I thought struggle was normal, especially when it came to money.
I started working at the age of nine to have a little spending money and hoped I’d someday do better, but money always burned a hole in my pocket, no matter what I did.
I kept telling myself if I just had more of it, things would be fine.
Spoiler alert: No matter how much money I made, it never fixed the problem of my overspending.
It wasn’t until 2018, after spending most of my 20s without an emergency fund, overspending, not investing and thinking I’d die with student loan debt, that I decided it was time for a change.
I started learning about the debt-free community, which led me to the FIRE (financial independence, retire early) community, and eventually I thought, Why not me?Why not at least try?
Well, I’m glad I did.
Not only do I now know the peace of financial flexibility and a retirement savings that I’ve already invested enough in to have millions by the time I retire even if I don’t invest another dollar, but it also led me to something I never expected.
I started writing about budgeting and investing online, which led me to creating content on Instagram and TikTok, which led me to become who I am now: a multi-six-figure business owner.
But this time last year?
I was just excited to even be able to consider quitting my job to pursue my passion of teaching people about money full-time.
So, with a year’s emergency fund saved and a solid $5,000 from one-on-one coaching filtering into my bank account each month, I went off into full-time entrepreneurship land.
Last month was my one year anniversary, and I did not make $60,000.
The gross revenue I made from my first year as a full-time business owner was $305,000 with about $45,000 of expenses.
How did I do it?
By recognizing I had to scale, bringing in an expert and focusing on one funnel and one product.
Recognizing I needed to scale
When I quit my job, almost 100% of my income came from one-on-one coaching. In fact, during my first month of full-time business ownership, I had 60 coaching calls, with more than half of the calls lasting two hours.
By the end of the first week, after 17 coaching sessions, I was already losing my voice, and feeling drained and discouraged.
I knew I couldn’t keep up with that kind of grueling schedule, so I increased my prices in October and again in December, thinking it would lighten the load without really impacting my income.
I was wrong.
By the end of the year, I charged $499 for a two-hour session and $299 for a one-hour session — but no matter how many times I increased my prices, I still sold out within 24 hours of announcing openings in my coaching calendar.
The coaching clients kept rolling in, and I had a hard time saying no to the emails requesting help as soon as possible or clients who needed another follow-up call. So, despite trying to manage my client load, I’d always end up with more than I could handle. Between October and December that year, I ended up coaching nearly 150 people.
I was exhausted and already burned out, just two months into full-time entrepreneurship.
Then, one day while lying on the couch to close my eyes for three minutes before the next coaching call, it hit me: I needed to scale. At the rate I was going, I’d be back in corporate in three months. I was capped, and despite wanting to help more people, my system at the time was unsustainable.
I needed to find a way to move beyond selling my time. But I had no idea where to begin. That’s why I decided to bring in an expert.
Scaling beyond coaching was new territory for me, and although I’d seen other creators create courses and digital products, I wanted to make sure I was doing what was best for my business.
When I started shopping for a business coach, I was nervous because there are so many problematic business coaches who teach people how to run a business despite never having run a business before. I wanted someone I could trust, and who I knew had worked with people in a similar niche, with similar goals.
After doing my research, I decided to hire a well-regarded coach who had helped the giants in the space scale to multi-six-figure — and even seven-figure — businesses. She’d be the person who would teach me how to launch a course and build a funnel.
By working with my coach, I was able to go full-speed ahead and avoid a bunch of mistakes I would’ve made trying to do it all myself — mistakes that would’ve cost me time and money.
Investing $2,000 into my business resulted in my first product launch bringing in $35,000 — but I would’ve never gotten these kinds of results if I hadn’t hired my coach and implemented a funnel.
I did not know what a funnel was when I quit my job, but my funnel was the single most important investment I made in my business.
A funnel allowed me to make sales without doing anything — no posting, no DMing people, no going live to push the sale.
Instead, I was able to get people into my funnel and let the funnel do its automated magic.
Here’s how my funnel worked:
Instagram or TikTok followers would sign up for a free guide.
The free guide would invite them to my free class.
The free class would have a small pitch for my course, and all registrants would be put into a sales funnel of emails for the next 2-5 days.
Keep in mind: At each stage, I was providing more value.
My funnel made me sales even while I slept. No posting. No exhausting my followers on all my accounts to get in on the sale. My emails were set up to do it all for me so I could spend my time doing other things to build my business.
The emails people received after signing up for the free class addressed their concerns, answered most frequently asked questions, shared testimonials and painted the appealing picture of what their life would look like after they completed the course.
So many content creators create a course or digital product and push it out to their audience without a funnel. They just put it on sale and hope people from their Instagram or TikTok will buy it because it exists. If you build it, they will come, right?
Not exactly.
We have to nurture the relationship, and an Instagram follower is at a much different stage than an email subscriber or someone who has downloaded your free guide and attended your workshop.
We have to provide consistent value that builds trust with our ideal audiences. Going straight for the killshot of “Hey, buy my product” would be like asking for a job without having ever applied or submitted a resume. You need to date your leads and nurture them by providing value.
Focusing on perfecting my funnel has allowed me to zone in on what is and isn’t working, understand my audience better and not get distracted by the shiny-object syndrome that so many new entrepreneurs face.
First, it allowed me to streamline my messaging to my audience to make sure they were never confused about what I have to offer. I wanted to guarantee people went to my page and saw immediately what I specialized in: lazy investing. Not a little bit of lazy investing with some debt pay off, credit repair and budgeting sprinkled in. I want my audience to come to my page and understand exactly how I can help them.
Think about the last time you were shopping for a service: for example, a person to clean your home.
If you came across someone who had a list of services that included lawn care, car detailing, oil changes, handyman services — and oh yeah, they’d also clean your home for you — you likely wouldn’t choose that person over someone who made it clear that cleaning your home was the only thing their business did.
Focusing on one product also helped me master the product, which only made my confidence in the product stronger and, in turn, allowed me to sell with ease.
When we know without a shadow of a doubt that our products solve the problem we say they do, selling becomes simply highlighting the problem and explaining how our product is the solution.
I don’t think I could’ve made as strong of a course had I not focused on only that course in the last year. Every month I added to it, tweaked, surveyed my members and found new ways to improve it. And the result is more than 500 happy customers who are now out there building wealth on their own.
We all know how overwhelming and stressful it can be to manage a million different things: coaching, courses, digital products, group coaching and the list goes on. The mental space and clarity that come with focusing on one thing is something I’ll continue to prioritize as I build out more products in the future.
Now that I’ve worked on The Lazy Investor’s Course and its funnel for a year, you might be wondering if I’m moving on to something new.
But in 2023, I plan to continue to perfect the funnel and my offer. Because even though I’ve made more than $300,000 from my business so far, I know I can still make improvements. So I’ll continue to refine this one offer I have until I’m confident I’ve squeezed everything out of it that I can.
And then — and only then — will I move on to the next thing.
As my friend Allison Baggerly said in her keynote at Fincon this year: simple scales.
And for me?
Simple allows me to maintain a level of sanity and make sure I don’t burn out.
After years of TINA, or the “there is no alternative” to stocks, bonds are once again in the spotlight. The selloff in bonds this year has pushed prices down and yields up, making municipal bonds an attractive place to seek income, especially for high-income investors in states with the high marginal tax rates. But there is more to the asset class than the tax-free benefits. Municipal bonds, or munis, have outperformed other bonds this year, but have still slumped. The Bloomberg U.S. Aggregate Total Return Index, a basket of different types of bonds, is down more than 15% year to date, while the Bloomberg municipal bond index has shed about 12%. Because yields move inversely to price, this means yields are at the highest in more than a decade. “The significant selloff has created opportunities that we largely haven’t seen in 15 years,” said Cooper Howard, fixed income strategist for the Schwab Center for Financial Research. “To be candid, this is an exciting time in bonds,” said Megan Gorman, founder and managing partner of Chequers Financial Management in San Francisco. 1. Consider tax-equivalent yield Munis are tax-exempt at the federal level and at the local and state level for residents of the issuing state. This means that a taxable bond would need to earn a higher yield – and potentially face greater risk – to match the return on the municipal bond. For example, individuals who are subject to the top federal tax rate of 37% can get similar tax equivalent yield from a 5% muni bond and an 8% high-yield corporate bond. Given that a corporate bond with a yield that high is usually junk-rated, the muni is a much safer bet for the same income. But that doesn’t mean that investors should only buy munis from their home state to reap double or triple tax-exempt income. Investors in states that have high taxes and issue lots of munis, such as California and New York, may be able to focus on in-state bonds and benefit from multiple levels of tax benefits. But investors outside of those states may struggle to only invest in-state and still maintain a diversified bond portfolio, according to Howard. “We suggest that if you’re investing in municipal bonds, individual bonds, you invest in 10 different issues with different credit risks,” he said. “That could be relatively difficult in one state.” That means that most portfolios should include a mix of munis from states beyond an investor’s home residence. A balance of 75% to 80% of munis from in-state and the remainder from out-of-state generally works, said Scott Sprauer of MacKay Municipal Managers. In addition, though investing in-state means no taxes, you may get higher yields or at least an equivalent yield by snapping up an out-of-state muni. That’s because of tax-equivalent yield, which is the yield that a muni or other bond gives after taxes are paid. 2. Credit ratings still matter While yields on munis have jumped, it’s also vital for investors to look at each bond’s credit rating and not simply chase the highest income. As with other bonds, those with lower credit ratings carry more risk that the issuer will default. “Getting your money back is” key, said John Luke Tyner, fixed income portfolio manager at Aptus Capital Advisors in Fairhope, Alabama. It’s also a good idea to consider what the bonds are being issued for, as some projects are safer than others. For example, schools are generally a safe bet as they’re tax supported. Hospitals and utilities like water and sewers are essential and so are also likely safer muni investments than sports stadiums or highways. Other types of munis to closely scrutinize are publicly-backed private projects, such as the American Dream mall in New Jersey or the Brightline Rail project in Florida, which carry higher risk. But, generally speaking, credit quality in the municipal bond market has been strong during this latest cycle. “Part of the reason why is the amount of fiscal aid that was provided to state and local governments right after the coronavirus crisis began,” said Howard. “That was substantial.” Of course, when comparing munis to corporate bonds, there is one important distinction — typically corporate debt is unsecured, meaning that it has no collateral backing. By contrast, munis are generally secured with local and state incomes, sales and property tax receipts, making them safer. This is also important going into a recession, when some corporates are more likely to get swiftly downgraded, said Sprauer. “That’s less so in the muni marketplace because it’s very, very stable,” he said. 3. Investing differs from stocks Muni bonds serve a different goal in a portfolio than assets such as stocks, which you hope go up in value over time. For bonds, and particularly munis, investors aren’t looking for returns so much as they are looking for income, and if the issuer will make payments on time. “There’s typically some price appreciation with it but it’s hard to bank on price appreciation unless you’re a very active muni bond trader,” said Tyner. For retirees, this piece of the puzzle is especially beneficial as they want portfolios that yield income, especially in a year when stocks have shed value. “If we look at the traditional retirement planning strategy, you want to have things like Social Security, pensions, dividend income and you also want a layer of bond interest,” said Gorman. “And if it’s tax-exempt bonds interest, that’s even better.” Because municipal bonds are so complicated and there are nuances in every investor’s portfolio, experts generally recommend leaning to a bond fund manager or working with a financial advisor or another expert to determine what to buy. Diversified muni bond mutual funds are also a good option for investors, giving access to the muni market without having to take on the risk of buying individual bonds. See below for a list of muni bond funds:
