Title: Bitcoin and Cryptocurrency Trading for Beginners 2021: 3 Books in 1: The Ultimate Guide to Start Investing in Crypto and Make Massive Profit with Bitcoin, Altcoin, Non-Fungible Tokens and Crypto Art
Author: Nicholas Scott
Paperback: 397 pages
Publisher: Independently published
Publishing date: April 11, 2021
Who is this book for?
Aspiring cryptocurrency investors who are looking for advice on entering this unique market.
Experienced cryptocurrency investors who want to expand their knowledge of cryptocurrency, non-fungible tokens (NFTs) and crypto art.
Readers who don’t want to take the risk of investing in cryptocurrency, but are interested in learning how it works.
What’s inside this book?
A down-to-earth beginner’s guide into the world of crypto investing.
Advanced analysis of the cryptocurrency market.
Tips and tricks for making it big through cryptocurrency.
Strategies for choosing the perfect coin and keeping your investments safe.
A step-by-step guide for creating and selling your own NFTs.
3 lessons you’ll learn from this book:
How to make your first cryptocurrency investment.
How to build the perfect cryptocurrency trading strategy.
The 6 secret qualities of a high-value NFT.
5 questions this book will answer for you:
What is cryptocurrency and how does it work?
Is it a good idea to invest in cryptocurrency?
What are NFTs and why are they the currency of the future?
How can NFTs be used in the digital world?
What is crypto art?
What people are saying about this book:
“Don’t know what a Bitcoin is? Confused by cryptocurrency and art? These three books explain what they are and how to invest in them. The author also explains how crypto art can be a profitable investment.”
“I found this book understandable and well written. I found the part on the NFTs really interesting. I used to be skeptical about NFTs, but after reading this book, I understood how they work and how they can be used as an investment.”
Your Turn: What did you think of Bitcoin and Cryptocurrency Trading for Beginners? Share your opinion in the comments.
Q: I’m trying to heal financially as life returns to pre-pandemic norms, but the rising cost of many commodities, like groceries and gasoline, is making a financial rebound a challenge. Why are prices skyrocketing right now?
A: The jump in prices of many goods is proving to be a formidable challenge to millions of Americans who are attempting to recover from the pandemic. There are several compounding factors triggering the rise in prices across multiple industries, and the upward trend is likely to continue for a while. Here’s what you need to know about the sky-high prices dominating the post-pandemic economy.
How much more do groceries cost compared to a year ago?
A trip to the grocery in 2021 doesn’t come cheap. According to new data from NielsenIQ, all 52 tracked food categories are more expensive now than they were a year ago. The cost of fresh meat, for example, jumped by 8.6% from May 2020 to May 2021, while processed meats are up by 9.2% and the cost of eggs has seen a nationwide increase of 8.2%.
What is causing the increase in grocery prices?
A confluence of factors is causing grocery prices to rise.
For one, the pandemic has caused a shortage in many materials due to a prolonged disruption in the labor force and supply chain, which has increased demand, and the prices of these goods, to rise. Grocery items, in particular, also saw a surge in demand due to the many Americans cooking at home while on lockdown during the pandemic. Many industries are still suffering from these shortages and don’t expect to recover for a while. In fact, the Bloomberg Commodity Spot Index, which tracks 23 raw materials, is at the highest level it’s been in nearly a decade.
Second, there is a shortage in the labor market now, which can likely be attributed to the inflated and extended pandemic unemployment insurance, which made many laborers reluctant to return to work. Employers are forced to offer more pay for attracting workers, and they pass this extra cost on to consumers.
Finally, the increase in prices can be linked to the rise in transportation costs as gas prices continue to rise, which we’ll explore more in a moment. Again, this increased expense is passed on to the shopper through higher prices on consumer goods.
Why are gas prices so high?
It’s sticker shock at the gas pump these days, with prices as high as $4 per gallon in some parts of the country.
There are many factors contributing to the rise and fall in gas prices, of which the fluctuating price of crude oil is most prominent. According to the U.S. Energy Information Administration (EIA), approximately 60% of the money we pay for a gallon of gas goes to cover the costs of the crude oil that went into making it. Another 25% pays for the costs of refining, distributing and marketing the gas, while the rest pays for federal taxes, and state taxes in some states as well.
Crude oil prices, in turn, rise and fall in direct correlation of multiple factors. Most recently, here’s what’s causing the price of crude oil to peak:
Basic rules of supply and demand. The last few months saw a loosening of COVID-19 restrictions around the globe. This led to an increase in the demand for gas, and in turn, for crude oil. In contrast, at the height of the pandemic, demand for crude oil fell sharply — and so did its price tag.
The presidential election. Crude oil prices have spiked by an average of $0.75 per gallon since Nov. 3, 2020. The oil markets evidently see the current administration as one that will inhibit U.S. oil production, which leads to a tightening on the global oil market. Traders responded by driving up the price of crude oil. Seasonal market changes. The price of crude oil tends to rise and fall with the seasons, where prices generally rise in the spring and summer months as more motorists hit the road, thereby increasing demand. The changeover to summer gasoline blends also leads to a jump in gas prices at this time of year
Change in the value of the dollar. Oil is priced in U.S. dollars within the world market. When the dollar is strong, relative to other currencies, crude oil is cheaper for Americans and more expensive for the global market. When the dollar is weak, as it is now, oil becomes more expensive for Americans.
Strong discipline among the OPEC+ nations. When the nations which are part of OPEC+ stick to their agreement to cut back on oil production, prices increase.
What can I, as a consumer, do about the rising cost of goods?
Unfortunately, as a private consumer, there’s not much you can do to bring down the costs of common goods. However, there are steps you can take to help you manage these costs in a financially responsible manner.
First, you’ll likely need to make some changes to your monthly budget to accommodate the higher costs of groceries and gas. Shuffle your spending categories by trimming discretionary expenses until you have enough money to cover the costs of food and transportation.
Next, incorporate cost-saving techniques you may not have needed to use until now to help you manage these increased expenses. Think couponing, shopping the seasons and the sales, buying items you always use in bulk, and cutting back on pricey grocery items you can do without. To save on gas costs, consider walking to work or to do your errands, carpooling when possible, or using public transportation more often.
Rising prices might be hard on the wallet, but with some proactive steps, you can still stay on top of your finances and help bring your financial health back to pre-pandemic norms.
Your Turn: How are you budgeting for the rise in the cost of groceries and gas? Share your tips with us in the comments.
One of the most important parts of setting up a monthly budget is separating needs from wants. Before assigning dollar amounts to any categories, it’s important to know which parts of your monthly expenditures are an absolute need, and which items would be nice to include, but are not a necessity. Many people find this particularly challenging, and many even give up on budgeting when they can’t move past this step.
Fortunately, it doesn’t have to be this way. Below, we’ve outlined how to tell the difference between wants and needs, as well as how to separate these two categories on a monthly budget plan.
Defining needs and wants
A need is something that is necessary to live and function.
A want is something that can improve your quality of life.
Using these criteria, a need includes food, clothing, shelter and medical care, while wants include everything else. However, as you’ll find when creating a budget, these terms are more fluid than they appear to be at first glance. While working through your lists, you may find that some items can fit into both categories, making the process confusing.
A good trick for dividing wants from needs is to let some time pass before fulfilling your desire for the item, either theoretically or practically. The desire to obtain a need only grows stronger as time passes, while the desire to fulfill a want will weaken with passing time.
Listing your needs and wants
Now that we’ve defined each of these budget categories, you can begin listing your own needs and wants.
Start with your needs, including the basics, like food, rent or mortgage, as well as other fixed expenditures that are necessary for you to live and function. Those things may include transportation costs, health insurance coverage and any clothing or tools you need for work.
It’s important to note that needs will vary from one person to another, and even for one person at different stages of life. For example, a family with two working parents who live in a community where there is no reliable public transportation may require two vehicles. Conversely, a family living in a city with several dependable transportation systems may list a second car as a want. Similarly, a four-bedroom home may be a need for a family while they’re raising several young children, but turn into a want later when the kids go off to college.
If you get stuck on a particular item and don’t know where to place it, hold it up to the following questions:
Do I really need this item to live and function?
Is it possible to fill this need in a less expensive way?
How would my life be different if this item were not a part of it? When you’ve completed your list of needs, you can list all remaining expenses in your category of wants.
Reviewing and tweaking your lists
After completing this exercise, review your list of needs to see if anything can be removed. Will you still need these items a few years from now, or even a few months from now? Can any of your needs be swapped for a cheaper option? For example, you may need clothing, but do you need eight pairs of designer jeans?
Do the same for your list of wants. Which of them are only there because of pressure to keep up with others or look good? Which of your wants were more important to you in the past than they are today? Which are status symbols? Pare down your list until you’re only left with the wants that truly add value to your life.
Now that you know how to tell the difference between needs and wants, creating a monthly budget is simple. Assign dollar amounts to your fixed and non-fixed needs, set aside money for savings and use the rest to pay for your wants.
Going forward, you’ll likely also have an easier time keeping your impulse buys under control. Before purchasing an item, ask yourself if it’s a need or a want. If the item is a want, consider its importance and other wants you’ve recently bought before going ahead with the purchase.
Separating wants and needs can be one of the most challenging parts of creating a monthly budget. Follow the steps outlined above to learn how to make the distinction between these two spending categories with ease.
Your Turn: How do you separate wants from needs? Share your tips and tricks with us in the comments.
Re-acclimating to normal life as pandemic restrictions are lifted and businesses reopen across the country will mean more than just getting used to wearing real pants again and working without your cat on your lap. You’ll also need to consider your finances. How has your overall money management changed during the pandemic? Have you dipped into your savings? Have you been letting your retirement accounts slide? Or, maybe you’ve been waiting for the chance to hit your favorite retailers again, and you can’t wait to splurge after a 15-month financial fast.
As you prepare to leap back into normal life, proceed with caution. Be sure to consider your full financial picture as well as long-term and short-term goals.
Here are some forward-thinking money moves to make as you adjust to post-pandemic life.
Review and adjust your budget
Pandemic times required their own budget, as people cut down on costs like dining out and updating work wardrobes, but spent more on things like at-home entertainment. Others may have had to adjust their spending to fit a changed income level or to help them coast during a stint of unemployment. The pandemic may have also shifted something in some people’s mental list of needs and wants, as they found they can live with a lot less than they’d believed.
As you adjust to post-pandemic life, take some time out to review and tweak your monthly budget. Be sure to incorporate any changes in income, as well as a readjustment to pre-pandemic spending or changed priorities. You may need to review and adjust your budget, and maybe even your spending behaviors, every few months until you find a working balance.
Rebuild your savings
If you are one of the many Americans who were forced to dip into savings, or even to empty them completely, during the pandemic, create a plan to get your savings back on track. Tighten up your spending in one area until you’ve built up an emergency fund that can keep you going for 3-6 months without an income, or use a windfall, such as a work bonus or tax refund, to get the bulk of your emergency fund in place.
Once your emergency fund is up and running again, continue to practice basic saving habits, such as setting aside 20% of your monthly income for savings, or whichever approach you prefer. If the pandemic taught us anything, it’s that it’s always best to be prepared, because you never know what can happen.
Rethink your long-term and short-term financial goals
The pandemic has prompted many people to reevaluate their goals. Retiring before you hit 50 or spending a month in Europe next summer may not be as important to you as you’d originally believed; or it may be even more important now. Similarly, you may realize your family has outgrown its living space and that moving to a new home is your number one financial priority. Or maybe you’ve decided you can live without a second car.
Take some time to rethink your long-term and short-term financial goals and adjust your savings and budget accordingly.
As you move through this step, be sure to consider any long-term goals you may have put on hold during the pandemic. Have you stalled your contributions to your retirement accounts or toward your child’s college tuition fund? Have you been making only the minimum payments on your credit cards? If any of these apply to you, be sure to revert your savings and debt payments back to pre-pandemic levels as soon as you can.
Spend with caution
It’s perfectly fine to enjoy a shopping spree in celebration of a return to pre-pandemic norms, but it’s best to spend with caution.
First, prepare to encounter inflated prices wherever you go. Gas prices have jumped recently, and costs of many consumer goods have spiked as well. If you planned to purchase a big-ticket item like a new car or tickets for a cruise, consider waiting it out a bit until prices cool off.
Also, you may be eager to make up for lost time, but no amount of nights out on the town will bring back the months you spent at home. Similarly, overbuying for this fashion season won’t bring back the seasons you spent at home in a hoodie and sweatpants. To avoid irrational overspending, set up a budget before you hit the shops and only spend what you’ve planned.
The restaurants and movie theaters are open for business again, and mask mandates are dropping all over the country. As life returns to pre-pandemic norms, be sure to consider the state of your finances and to make responsible, forward-thinking money moves like those listed here.
Your Turn: What post-pandemic money moves will you be making now? Tell us about it in the comments.
Have you been bitten by the gotta-have-it bug? It could be a Peloton bike that’s caught your eye, or maybe you want to spring for a new entertainment system, no matter the cost. Before you go ahead with the purchase, though, it’s a good idea to take a step back and follow the steps outlined here to be sure you’re making a decision you won’t ultimately regret.
Step 1: Wait it out
Often, a want can seem like a must-have, but that urgency fades when you wait it out. Take a break for a few days before finalizing a large purchase to see if you really want it that badly. For an extra-large purchase, you can wait a full week, or even a month. After some time has passed, you may find that you don’t want the must-have item after all.
Step 2: Consider your emotions
A bit of retail therapy every now and then is fine for most people, but draining your wallet every month to feed negative emotions is not. Before going ahead with your purchase, take a moment to identify the emotions driving the desire. Is this purchase being used as a means to fix a troubled relationship? Or to help gain acceptance among a group of friends, neighbors or workmates? Or maybe you’re going through a hard time and you’re using this purchase to help numb the pain or to fill a void in your life. Be honest with yourself and take note of what’s really driving you to make this purchase. Is it really in your best interest?
Step 3: Review your upcoming expenses
What large expenses are you anticipating in the near future? Even if you have the cash in your account to cover this purchase, you may soon need that money for an upcoming expense. Will you need to make a costly car repair? Do you have a major household appliance that will need to be replaced within the next few months? By taking your future financial needs into account, you’ll avoid spending money today that you’ll need tomorrow.
Step 4: Find the cheapest source
If you’ve decided you do want to go ahead with the purchase, there are still ways to save money. In today’s online world of commerce, comparison shopping is as easy as a few clicks. You can use apps like ShopSavvy and BuyVia to help you find the retailer selling the item at the best price.
Step 5: Choose your payment method carefully
Once you’ve chosen your retailer and the item you’d like to purchase, you’re ready to go ahead and make it yours! Before taking this final step, though, you’ll need to decide on a method of payment.
If you’ve saved up for this item and you have the funds on-hand for it now, you can pay up in cash or by using a debit card. This payment method is generally the easiest, and if it’s pre-planned, it will have little effect on your overall budget.
If you can’t pay for the item in full right now, consider using a credit card with a low interest rate. Most credit card payments have the added benefit of purchase protection, which can be beneficial when buying large items that don’t turn out to be as expected. Before swiping your credit card, though, be sure you can meet your monthly payments or you’ll risk damaging your credit score.
Another option to consider is paying for your purchase through a buy now, pay later program. Apps, like Afterpay, allow you to pay 25% of your purchase today, and the rest in fixed installments over the next few months. This approach, too, should only be chosen if you are certain you can meet the future payments.
Large purchases are a part of life, but they’re not always necessary or in the buyer’s best interest. Follow these steps before you finalize an expensive purchase.
Your Turn: What steps do you take before finalizing a large purchase? Tell us about it in the comments.
If you’re a homeowner in need of a bundle of cash, look no further than your own home. By tapping into your home’s equity, you’re eligible for a loan with a, generally, lower interest rate and easier eligibility requirements. One way to do this is by opening up a home equity line of credit, or a HELOC. Let’s take a closer look at HELOCs and why they can be an excellent option for cash-strapped homeowners.
What is a HELOC?
A HELOC is a revolving credit line that allows homeowners to borrow money against the equity of their home, as needed. The HELOC is like a second mortgage on a home; if the borrower owns the entire home, the HELOC is a primary mortgage. Since it is backed by a valuable asset (the borrower’s home), the HELOC is secured debt and will generally have a lower interest rate than unsecured debt, like credit cards. You will need to pay closing costs for the line of credit, which are generally equal to 2-5% of the total value of the loan.
How much money can I borrow through a HELOC?
The amount of money you can take out through a HELOC will depend on your home’s total value, the percentage of that value the lender allows you to borrow against and how much you currently owe on your home.
Many lenders will only offer homeowners a HELOC that allows the borrower to maintain a loan-to-value (LTV) ratio of 80% or lower.
A quick way to find a good estimate of the maximum amount you can borrow with a HELOC is to multiply your home’s value by the highest LTV the lender allows. For example, continuing with the above example, if your home is valued at $250,000 and your lender allows you to borrow up to 80% of your home’s value, multiply 250,000 by 0.80. This will give you $200,000. Subtract the amount you still owe on your mortgage (let’s assume $100,000) and you’ll have the maximum amount you can borrow using a HELOC: $100,000.
Is every homeowner eligible for a HELOC?
Like every loan and line of credit, HELOCs have eligibility requirements. Exact criteria will vary, but most lenders will only approve the line of credit for homeowners who have a debt-to-income ratio of 40% or less, a credit score of 620 or higher and a home with an appraised value that is at minimum 15% more than what is owed on the home.
How does a HELOC work?
A HELOC works similarly to a credit card. Once you’ve been approved, you can borrow as much or as little as needed, and whenever you’d like during a period of time known as the draw period. The draw period generally lasts five to 10 years. Once the draw period ends, the borrower has the choice to begin repaying the loan, or to refinance to a new loan.
How do I repay my HELOC?
The repayment schedule for a HELOC can take one of three forms:
Some lenders allow borrowers to make payments toward the interest of the loan during the draw period. When the draw period ends, the borrower will make monthly payments toward the principal of the loan in addition to the interest payments.
For many borrowers, though, repayment only begins when the draw period ends. At this point, the HELOC generally enters its repayment phase, which can last up to 20 years. During the repayment phase, the homeowner will make monthly payments toward the lHELOC’s interest and principal.
In lieu of an extended repayment phase, some lenders require homeowners to repay the entire balance in one lump sum when the draw period ends. This is also known as a balloon payment.
How can I use the funds in my HELOC?
There are no restrictions on how you use the money in your HELOC. However, it’s generally not a good idea to use a HELOC to fund a vacation, pay off credit card debt or to help you make a large purchase. If you default on your repayments, you risk losing your home, so it’s best to use a HELOC to pay for something that has lasting value, such as a home improvement project.
How is a home equity line of credit different from a home equity loan?
A home equity loan is a loan in which the borrower uses the equity of their home as collateral. Like a HELOC, the homeowner risks losing their home if they default on it. Here, too, the exact amount the homeowner can borrow will depend on their LTV ratio, credit score and debt-to-income ratio.
However, there are several important distinctions between the two. Primarily, in a home equity loan, the borrower receives all the funds in one lump sum. A HELOC, on the other hand, offers more freedom and flexibility as the borrower can take out funds, as needed, throughout the draw period. Repayment for home equity loans also works differently; the borrower will make steady monthly payments toward the loan’s interest and principal over the fixed term of the loan.
A home equity loan can be the right choice for borrowers who know exactly how much they need to borrow and would prefer to receive the funds up front. Budgeting for repayments is also simpler and can be easier on the wallet since they are spread over the entire loan term. Some borrowers, however, would rather have the flexibility of a HELOC. They may also anticipate being in a better financial place when the repayment phase begins, so they don’t mind the uneven payments.
Your Turn: Have you taken out a HELOC? Tell us about it in the comments.
Q: Paperwork from credit card companies always seems to be filled with tiny print that’s hard to read and even harder to understand. How do I read the fine print from my credit card issuer?
A: Fine print is designed to keep you from paying attention, but it often contains important information you can’t afford to miss. Here’s what you need to know about reading and understanding the fine print on credit card applications and billing statements.
What do all those terms mean, anyway?
First, let’s take a look at 12 basic credit card terms that are important to know but are often misunderstood:
Accrued interest – The amount of interest incurred on a credit card balance as of a specific date.
Annual Percentage Rate (APR) – The rate of interest that is paid on a carried credit card balance each year. The amount of interest charged each month will vary according to the current balance. This number can be determined by dividing the current APR by 12 to get the monthly APR rate, and then multiplying that number by the current balance.
Annual fee – The yearly fee a financial institution or credit card company charges the consumer for having the card.
Balance – The amount of money owed on the credit card bill.
Billing cycle – The amount of time between the last statement closing date and the next.
Calculation method – The formula used to calculate the balance. The most common is the daily balance method, where charges are calculated by multiplying the day’s balance by the daily rate, or by 1/365th of the APR.
Cash advance – Money withdrawn from a credit card account. Cash advances usually have strict limits, higher interest rates and fees.
Credit limit – Also known as a line of credit, this refers to the maximum amount of money that can be charged to your credit card.
Default rate – Also called the penalty rate, this refers to an especially high rate of interest that kicks in if the consumer is late in making monthly payments and/or has violated the terms and conditions of the card.
Grace period – The time between making a purchase and being charged interest on that purchase.
Late payment notice and fee – These will alert the consumer to a missed payment and its associated fee.
Minimum payment – The smallest amount of money the consumer can pay each month to keep the account current.
What’s the big deal about all the small print on my credit card application?
Don’t sign on the dotted line (or digital signature pad) just yet! Those microscopic letters on your credit card application actually contain important information. Here are some common claims you might find on an application and what the small print below these claims actually says:
Claim: Sign-up bonus: $950!
Fine print: Must spend $3,000 on the card within the first three months of ownership. Redeemable only at participating airlines.
Claim: Interest-free offer!
Fine print: Expires after 18 months, the same time a 22.5% interest rate kicks in.
Claim: 0% balance transfer!
Fine print: With a $300 balance transfer fee.
Claim: 5% cash back on grocery spending!
Fine print: Capped at $1,000 per quarter and only at participating grocery stores.
Claim: Cash advance of up to $1,500!
Fine print: With 20% interest and a $200 cash-advance fee.
Claim: Generous 25-day grace period!
Fine print: We reserve the right to shorten the grace period at any time.
How do I find the fine print on my credit card application or statement?
Read the fine print before you sign up for a credit card offer. You can find this information on the credit card’s paper or digital application under a label marked “Pricing and Terms” or “Terms and Conditions.” You can also find this information when researching credit cards online; look for it under the “Apply Now” button where it may be labeled as described above, or as “Interest Rates and Fees” or “Offer Details.”
If you’ve already signed up for the card, you’ll find these conditions on the “Card member Agreement” that generally accompanies a new credit card. The text will be lengthy, but will likely be divided into sections, including a pricing schedule, relevant fees and payment details.
Your credit card statements will also have lots of fine print, though most of it will be on the back of the bill. This information will include all the information from your application, as well as some additional information, including reports to credit bureaus, how your interest rate on the balance is calculated, how you can avoid paying interest on your purchases and how to dispute fraudulent charges on your bill.
You can find the small print on your credit card applications and statements by looking for an asterisk (*) or dagger (†), which indicates small-type footnotes at the end of the page or document.
Do I need to read all the fine print?
Fine print will appear all over your credit card paperwork, but it’s best to pay attention to the tiny letters near the points you most care about. For example, be sure to read up on the information given on all special promotions, introductory offers, bonuses, rewards and more. In general, you’ll find this rule to be true: “The large print giveth, and the small print taketh away.” In modern English, this means that the large print is designed to grab your attention and make you sign up for the card immediately, while the small print contains all the qualifiers, exclusions, justifications for future cancellations and more, about these claims.
Fine print written in financial jargon can be difficult to spot and to understand, but ignoring the small words on your credit card paperwork can have disastrous consequences. Let our guide help you learn how to read the fine print on your credit card applications and statements. Don’t let anything get past you!
Your Turn: Have you ever regretted missing the fine print on your credit card paperwork? Tell us about it in the comments.
Congratulations! You’ve just gotten the positive pregnancy test results and you’re breathless with excitement — and nerves. Or maybe you’re a few months along, and the mild panic is growing right along with the baby bump. Regardless, a baby means big changes, and some of those changes bring many new expenses. How will you pay for it all?
Whether you’re only thinking about having a baby, or your due date is fast approaching, there’s no need to stress about finances. By taking the necessary measures today, you can learn to cover these new expenses without falling into debt.
Here are some steps you can take to prepare financially for a new baby:
Pay down debt
There’s more than just a nursery to set up before your baby’s arrival. It’s best to get your finances in order to make it easier to manage all new expenses and prepare for your child’s future. If this involves getting rid of a mountain of debt, you can choose between these two debt-kicking plans:
The snowball method involves maximizing your payments toward your smallest debt balance first. Once it’s paid off, move on to the next-smallest debt, “snowballing” the payment from your previous debt into this one until it’s paid off, and repeating until you’re completely debt-free. The avalanche method involves maximizing payments toward the debt with the highest interest rate and then moving on to the one with the second-highest interest rate until all debts are paid off.
Adjust your monthly budget
Babies don’t come cheap. When your little one arrives, you’ll need to spring for baby gear and furniture, a new wardrobe, diapers and possibly child care as well. According to the USDA’s most recent report on the cost of raising a child, the average middle-income family will spend approximately $12,350-$13,900 on child-related expenses before their baby’s first birthday.
Most of these expenses will be ongoing, and it’s best to make room in your budget for these new items before the baby is born. Spend some time reviewing your monthly budget to look for ways to cut back on spending and give you that wiggle room to cover baby-related expenses.
Set up a baby account
All those baby expenses can be overwhelming, but if you break them down into bite-sized pieces, they’ll be easier to manage. You can do this by putting away some money for baby costs as soon as you plan on having a baby or find out you’re expecting. Consider setting up a new savings account at Advantage One Credit Union for all baby expenses to keep this money separate from other savings. You may also want to automate these savings by setting up a monthly transfer from your payroll or checking account to your “baby account.”
Estimate prenatal care and delivery costs
While exact amounts vary by state and by insurance provider, prenatal care and delivery can cost thousands of dollars. This includes out-of-pocket expenses, co-pays and insurance deductibles. Be sure to prepare for these expenses by saving up for them or by allocating a large windfall, such as a tax refund or generous work bonus, to be used for paying for prenatal care and delivery.
Start saving for college
Hard as it may be to believe, your little one will one day be all grown up and ready to go to college. With college tuition now averaging $41,411 at private colleges, $11,171 for state residents at public colleges and $26,809 for out-of-state students at state schools, according to data reported by U.S. News and World Report, this can mean paying a small fortune to give your child an education. In addition to spreading the costs over nearly two decades, starting to save for your child’s college education now will give those savings the best chance at growth.
Consider opening a 529 plan before your child is born where your college savings can grow tax-free.
Write a will
No one wants to think about their own death when preparing for a birth, but writing a will — and purchasing life insurance if you haven’t already done so — can be the best gift for your child in case the unthinkable happens.
Welcoming a new baby is a life-altering experience, and can mean big changes for your finances. Follow our tips to ensure you’re financially prepared for your new baby’s arrival.
Your Turn: What steps are you taking to prepare financially for a new baby? Tell us about it in the comments.
Insurance premiums can take a big bite out of a monthly budget, but not having enough coverage can be even more costly. Let’s take a look at the five primary insurance types and the most important information to know about each one.
1. Health insurance
What is it?
Health insurance is coverage that typically pays for medical, surgical and prescription drug expenses in exchange for a monthly premium. Many states mandate health insurance coverage and will collect fees, along with state taxes, from taxpayers who do not have sufficient coverage.
Types of health insurance plans
Health insurance plans are divided into two primary categories: public and private.
Public health insurance is provided at low or no cost through the federal and/or state government. The most common public insurance plans are:
Medicaid – Public insurance plan for low-income families and individuals. Eligibility requirements vary by state.
The Children’s Health Insurance Program (CHIP) – A federal and state program designed to cover children below the age of 18 whose families have incomes above the qualifications for Medicaid, but are too low to afford private health insurance.
Medicare – A federal health insurance program for Americans age 65 and older.
Private health insurance may be provided through an employer or purchased privately from the insurance provider, or through a broker.
These are the most common private health insurance plans:
HMO: Health Maintenance Organization – The most restrictive plans that only work with a network of healthcare providers. The insured must choose a primary care physician (PCP) who is in the network to benefit from coverage. To see an out-of-network specialist, the insured will need a referral from their PCP. HMOs tend to have cheaper premiums than other health insurance plans.
PPO: Preferred Provider Organization – The most flexible health insurance plans, which allow the insured to choose an in-network doctor at a lower cost, or an out-of-network doctor at a higher cost. There is no referral necessary to see a specialist. Premiums are generally more expensive than other plans.
EPO: Exclusive Provider Organization – A blend of HMO and PPO plans, EPOs do not cover out-of-network physicians, but do not require referrals for specialists. Premiums on EPOs fall between HMOs and PPOs.
POS: Point of Service – Another blend of HMO and PPO plans, POS plans will require a PCP on an HMO-style network, while also allowing out-of-network options at a higher cost. A referral is required for specialists. Premiums are generally more expensive than HMO plans but less expensive PPOs.
2. Life insurance
What is it?
Life insurance is a contract between an insurance company and a policyholder that guarantees a sum of money to the policyholder’s designated beneficiaries when the policyholder dies, in exchange for monthly premiums paid during the insured’s lifetime.
Types of life insurance
These are the five most common kinds of life insurance plans:
Term insurance – The most basic form of life insurance, with a predetermined term, usually ranging from one to 10 years. Plans are renewable at the term’s end, but the premiums will increase with each renewal. Term policies generally have the cheapest premiums, but no cash value.
Whole life insurance – Offers policyholders a cash-value component coupled with increased protection. Premiums can be locked in throughout the term, and a portion of premiums goes toward the policy’s cash value. The insured can borrow up to 90% of the cash value, tax-free, but loans reduce the policy’s death benefit.
Universal life insurance – Offers increased flexibility for policyholders. Premiums can go up or down, or even be deferred within certain limits. Cash values can be accessed and withdrawn, though this directly decreases the death benefit. Face values can be modified as well.
Variable life insurance – Fixed premiums and investment options make this policy the choice for true risk-takers. The policyholder’s cash value will be invested in the insured’s choice of stock, bond or money market portfolio. Cash values and death benefits will fluctuate along with the investments’ performance. These policies usually have higher fees than universal life insurance, but all cash value accumulation grows tax-free.
Universal variable life insurance – A blend of universal and variable life insurance, these policies offer flexible premiums and the ability to modify face values, along with investment options.
3. Auto insurance
What is it?
Auto insurance is a contract between a policyholder and insurance company, protecting the policyholder from financial loss in the event of an auto accident or theft. The coverage is provided in exchange for a monthly premium. Some form of auto insurance is required in all 50 states.
Types of auto insurance policies
These are the primary categories of auto insurance coverage:
Liability coverage – Includes coverage for bodily injuries, property damages or auto damages to another motorist if the policyholder is at fault.
Comprehensive coverage – Pays for damages and losses to the car that were not caused by another driver.
Personal injury protection – Covers medical bills for the policyholder and their passengers in the event of an accident.
Collision insurance – Covers damages to the policyholder’s car if it’s involved in an accident.
Uninsured/under-insured motorist protection – Pays for damages caused by another motorist who does not have sufficient (or any) coverage.
Gap insurance – Pays the difference between what the policyholder owes on a financed or leased vehicle and what it is valued at when there’s a total loss of the vehicle.
4. Long-term disability insurance
What is it?
Long-term disability insurance is an insurance policy that provides income replacement for workers if they are unable to work due to a debilitating illness or injury.
Types of long-term disability insurance
There are two primary types of long-term disability insurance policies:
Own-occupation disability insurance defines a disability as an inability to work at your regular occupation. Benefits are paid even if the policyholder can work at another job.
Any-occupation disability insurance defines a disability as an inability to work at any occupation. These plans are generally cheaper, but claiming benefits can be more difficult.
5. Homeowners/renter’s insurance
What is it?
Homeowners insurance is a policy designed to protect homeowners and their families from liability and financial loss in case of damage to their home and belongings in exchange for monthly premiums. Renters insurance is purchased by tenants and only covers damage or theft of their personal property.
Types of homeowners insurance policies
HO-2 – A policy that only protects against 16 specified perils.
HO-3 – A broad policy protecting against all perils other than those excluded in the policy.
HO-5 – A premium policy that usually protects newer homes and covers all perils, except the few excluded in the policy.
HO-6 – Insurance for co-ops/condominiums, which includes personal property coverage and liability coverage.
Each plan type will also include some extent of liability coverage. Most policies will only cover events if they are sudden and accidental. Some natural disasters, like earthquakes and floods, require a separate policy for coverage.
Types of renters insurance policies
Renters insurance policies will generally fall within either:
Replacement-cost plans – Will pay for the full cost of replacing your damaged or stolen belongings up to a predetermined cap. This plan offers more robust coverage, but premiums are generally higher.
Cash-value plans – Will only offer payouts to cover what the damaged item was worth at the time of the disaster.
Insurance is a big part of financial responsibility. Use our guide to help you make the right choices in all major types of insurance coverage.
Your turn: What are your best tips for buying insurance?
If you’re in the market for a new set of wheels, get ready to experience sticker shock. Prices on new and used cars have soared since the beginning of 2020, and experts aren’t expecting them to fall anytime soon. Here’s what you need to know about the current auto loan market and how to navigate it successfully.
Why are auto prices so high?
The coronavirus pandemic has touched every sector of the economy, and the auto industry is no exception. According to the U.S. Consumer Price Index, the price of used cars and trucks has jumped a full 9.4% in the last 12 months, while the price of new cars and trucks increased by 1.5%. The drive behind the increase is multifaceted and linked to several interconnected events.
When the pandemic hit American shores, demand for new and used cars increased significantly. This was largely due to the many people who were avoiding public transportation for safety reasons. The mass exodus from big cities and their high rates of infection also boosted the demand for new cars.
At the same time, supply of new and used cars dried up, thanks to these factors:
The pandemic put a freeze on the production of new vehicles for nearly a full business quarter. The factory shutdowns reduced output by 3.3 million vehicles and sales dried up, along with subsequent trade-ins.
The production freeze prompted chipmakers to focus on the electronics industry instead of creating chips for automakers. Now, the industry is still scrambling to keep up with the automakers’ demand.
Business and leisure travel was halted for months. This led to a steep decline in travelers renting cars, which in turn led to rental agencies holding onto more of the cars in their lots instead of selling them to used car dealerships.
The rise in demand and shortage of supply naturally triggered a steep increase in the prices of both new and used vehicles.
Rethink your auto purchase
If you’re in the market for a new car and the price tags are scaring you, you may want to rethink your decision. If your car is in decent condition, consider holding onto it a little longer until the market stabilizes. To go this route, consider the following tips to help make your car last longer:
Use a trickle charger to keep the battery in excellent condition.
Change your filters regularly.
Follow the service schedule. Most cars need to be serviced every 10,000 miles.
Keep all fluid levels high. This includes coolant, oil, antifreeze and windshield washer fluid.
Drive carefully to avoid sudden braking and prolong the life of your brakes.
Replace spark plugs when they begin showing signs of wear or melting. Depending on the vehicle, spark plugs need to be replaced every 30,000-90,000 miles.
Check your tires regularly and rotate and inflate them as needed.
Pay attention to all warning lights that are illuminated on the dashboard.
Have your car rust-proofed to keep the exterior looking new.
Tips for buying a car in today’s market
If you’ve decided to go ahead with buying a car, it’s best to adjust your expectations before hitting the dealership.
First, a seller’s market means many dealerships will not be as eager to close a deal as they tend to be. They have more customers than they can service now, and that can translate into a willingness to move only slightly on a sticker price of a car, or a refusal to negotiate a price at all. Processing a car loan may now take longer, too.
Second, expect to pay a lot more than usual for your new set of wheels. If you’re looking to purchase a new car, prepare to pay approximately $40,000. Also, as mentioned, supply of new cars is down while demand is up, so you likely won’t have as many choices as you may have had in the past.
The used-car market has been hit even harder by the pandemic since prohibitive prices and a short supply has pushed more consumers to shop for used cars instead of new vehicles. This increase in demand, coupled with the dwindling supply, has driven the prices of used cars up to an average of $23,000, according to Edmunds.com. If you’re thinking of buying a used car, prepare to encounter a highly competitive market where bidding wars are the norm and cars are super-expensive.
If you’re looking to take out an auto loan, consider one with your credit union. The most recent data shows that auto loans at credit unions are a full two points lower, on average, than auto loans taken out through banks. Car prices may be soaring, but credit unions continue to deliver lower rates and customer service you can really bank on.
The auto loan market has been hit hard by the coronavirus pandemic. Follow the tips outlined here to navigate today’s car market successfully.
Your Turn: Have you recently bought a new set of wheels? Share your best tips on navigating today’s auto market in the comments.