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Inside Sarah Jessica Parker and Matthew Broderick’s Windfall Real Estate Sale: What It Means for NYC>

Sarah Jessica Parker and husband Matthew Broderick aren’t just one of New York City’s most famous couples, they also know how to make a killing in Big Apple real estate.

Want proof? They’ve just sold their fancy downtown Manhattan townhouse on Charles Street for $15 million—more than five times what they paid for it about 20 years earlier.

According to Mansion Global, the stars of “Sex and the City” and “Ferris Bueller’s Day Off” bought the three-story building in 2000 for $2,995,000. Built in 1905, the townhouse was originally a multifamily property, and required an enormous renovation to transform it into a single-family home for this power couple and their three children.

Sarah Jessica Parker's former home is a brick-and-brownstone combo.
Sarah Jessica Parker’s former home is a brick-and-brownstone combo.

Google Street View

“And even after the initial gut renovation, the couple has continued to update the property using the best architects, so the condition is impeccable,” says Dolly Lenz, a real estate agent at the eponymous firm in New York City. “And the celebrity attached to the house will continue to have a positive impact on its value.”

“The return on investment for this home is really significant, and while each buyer has their own taste when they renovate, this townhouse is nothing short of ‘Sex and the City’ chic,” says Sara Burack, a real estate agent with Nest Seekers in New York City.

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Watch: Mel Brooks and Anne Bancroft’s Former Home Is No Joke

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In fact, although they netted a fivefold profit on the place, Lenz surmises that figure could have been higher had they wanted to hold out.

“They could have waited for more, given the premier location on one of the best blocks in the West Village,” Lenz says. “It remains the hottest neighborhood in New York City.”

Charles Street in NYC's West Village is both leafy and luxurious.
Charles Street in NYC’s West Village is both leafy and luxurious.

Patrick Corbett

What Sarah Jessica Parker and Matthew Broderick’s home sale means for NYC

Pulling in millions for a townhouse is common enough in the Manhattan real estate world, but because the coronavirus has crushed the market for most of the past year, does this sky-high price bode well for future city sales?

“Yes—any big-ticket sale right now is certainly a positive takeaway for the Manhattan market,” says Jennifer Lenz, a real estate agent at Dolly’s firm. In fact, she adds that even though winter is generally a slow time for New York City real estate transactions, brokers continue to see signs that the luxury realm is making a comeback as many savvy buyers are itching to make deals.

“Major real estate players are constantly watching the market and are striking now as long-term owners want to make a shift with their investments,” adds Burack.

Scott Harris, a real estate agent with Brown Harris Stevens, says the market bottomed out more than a month ago.

“But the luxury end of things is doing better year over year already, and there are myriad signs of stabilization everywhere,” he adds.

And that could be great news for Parker and Broderick, since their NYC real estate roots run wide and deep. Along with a sizable Hamptons footprint, they also have a pair of townhouses on West 11th Street, which they snapped up in 2016 for $34.5 million.

Why townhouses are prized in a pandemic

This celebrity sale speaks to another COVID-19-related trend as well: Townhouses and brownstones—which typically sport a private entrance and span an entire floor—have become all the more prized since they often offer a backyard, plus a buffer from crowded elevators and bustling building lobbies seen in larger buildings. More and more buyers who once eschewed the hassle and maintenance of owning a house in NYC are now changing their tunes.

“It’s so nice to have space in Manhattan and that suburban residential feel, while still being able to walk out into the action,” says Burack. “And townhouses are the perfect investment for those that can’t make the two-hour drive to the Hamptons.”

“Over the past two decades, townhouse sales have been quite volatile, and currently pricing on these properties is rather reasonable, with deals happening now that are substantially down from 2015–16 levels,” adds Harris.

All of which bodes well for NYC real estate during the pandemic, and beyond.

Source: realtor.com

VA Cash-Out Refinance: Is It a Good Idea? | Rates & Guidelines 2021


Nicole Carlson

Posted on: January 1, 2021

The VA cash-out refinance program enables veterans and active-duty service members to tap into their home’s equity and, depending on current refinance interest rates, lower their interest rate at the same time.

The idea of getting cash out of your home is appealing, but is it a good idea for you? Below, we’ll dive into some of the situations when a VA cash-out refinance might be a good fit — and when it might not.

Check your eligibility for a VA cash-out refinance loan today.

Reasons veterans get a VA cash-out refinance

Veterans use the VA cash-out refinance for plenty of reasons — the biggest being that they want to get cash. The cash comes from home equity. So, if you have a mortgage for $200,000 and you’ve paid off $50,000, you can get up to $50,000 back in cash, while also potentially lowering your mortgage rate.

Veterans aren’t required to take out the full amount possible, though. A homeowner in the same situation could take out $10,000 to fund a small kitchen remodel, to buy a new car, or pay for a vacation, for example.

The most common reasons to get cash from a cash-out refinance is to fund remodels, renovations, and repairs to your home — or to use the cash to pay off other debts. (It may be financially responsible to use a cash-out refinance to pay off credit card debt if the rate on the other debt is significantly higher than the new rate you’ll get from a cash-out refinance.)

But, there are other potential benefits to a VA cash-out refinance. You may be able to lower your interest rate and monthly mortgage payment. And, if you have an FHA or conventional loan with mortgage insurance, you could remove that extra monthly cost by refinancing into a VA loan.

Reasons to avoid a cash-out refinance

While it’s a good decision for many homeowners, refinancing isn’t the best option for everyone. You should only refinance if you can gain something from the new loan. When determining whether you’re benefitting from a cash-out refinance, it’s important to consider your whole financial situation and your goals.

It could increase your mortgage rate.

When veterans apply for a VA cash-out refinance, they’ll need to supply their credit score. If your credit score is lower than it was when you first applied for your mortgage, then there’s a good chance that the refinance could increase your mortgage rate.

The clock restarts on your mortgage.

It’s also important to remember that a cash-out refinance restarts the clock on your mortgage — you’re opening up a new loan with new terms, likely 30-years. This means additional interest costs. Because of this, it’s best to use a VA cash-out refinance for things that will improve your financial situation, and, in turn, improve your ability to repay the loan.

Riskier than other loan types.

VA cash-out finances are often used for home improvements that increase the overall value of the investment, education expenses to increase earning potential, new business ventures, or debt consolidation. Still, all of these options can represent a financial risk. Before proceeding with a cash-out refinance, it’s worth investigating other funding options such as personal loans, specialized loans (like student loans or small business loans) or second mortgages.

Finally, if you’re using cash from a VA cash-out refinance to pay off credit card debt, it’s important to remember that you’re paying off unsecured debt with secured debt — in other words, you risk foreclosure on your home if you are unable to make your mortgage payments for any reason.

VA cash-out refinance rates

VA cash-out refinance rates are currently low. According to Ellie Mae’s Ocober 2020 Origination Report, interest rates for VA loans hovered at an average of 2.75% — 0.26% lower than interest rates for 30-year, fixed-rate conventional loans.

Read more: Current VA Refinance Rates

With rates projected to remain low, Veterans who purchased a home within the last few years should check to see if a refinance could reduce their interest rate and monthly mortgage payment. Your potential savings are dependent on your unique situation — remember to comparison shop with multiple lenders to see who can offer you the best deal.

When a VA streamline refinance is right instead

If you don’t need cash, there’s no reason to get a cash-out refinance. In these situations, a VA streamline refinance (also known as an interest rate reduction refinance loan or IRRRL) makes more sense. The rates associated with the IRRRL tend to be lower, so you could save more money with that type of refinance.

If you’re looking to take out cash for energy-efficiency improvements to your home, the IRRRL allows homeowners to finance up to $6,000 in improvements that will save money over time, including programmable thermostats, insulation, solar heating, and caulking/weather stripping.

VA streamline refinance vs. VA cash-out refinance

If you’re looking to lower your interest rate and monthly payment, don’t need cash out and already have a VA loan, an IRRRL is the easier, quicker, and just plain better option. In fact, streamline refinances require that Veterans lower their mortgage rate to qualify for the loan (also called a net tangible benefit). That’s not a requirement with the cash-out refinance.

If you are looking to get cash for an expense like a remodel or debt consolidation, then a VA cash-out loan is likely the better option. It’s also a good option for Veterans with a non-VA loan requiring mortgage insurance. VA loans don’t require mortgage insurance, so refinancing into one, could remove that monthly expense.

How to apply for a VA cash-out refinance

The application and approval process for a VA cash-out refinance is very similar to the loan application process for a home purchase, including:

  • You’ll likely need a VA appraisal, especially if your existing loan is a non-VA loan. This establishes the current value of your home and helps determine the amount of cash you can take out.
  • You’ll need a credit check and income verification to verify that you’re able to make the new VA loan payments.
  • You’ll need to establish eligibility with minimum service requirements, especially if you currently have a non-VA loan.

Also, shop around with multiple lenders to compare rates and terms. This can save you lots of money over the life of the loan and allow you to negotiate better terms.

Check your eligibility for a VA cash-out refinance loan today.

Source: militaryvaloan.com

Bel-Air’s Bekins House Moves Onto the Market for $42.5M

If we were prone to groaners, we’d say it will be a moving experience when Bel-Air’s lavish Bekins house sells.

Originally built in 1934 for Floyd R. Bekins—an heir to the Bekins Van and Storage Co. fortune—the mansion has changed hands a number of times over the decades. It’s now on the market for a hefty $42.5 million.

The estate was originally designed by Oakland architect Claude B. Barton, who blended Georgian and Colonial Revival styles with the tall roofs of the French Norman style. The result is eclectic yet classic, and marked by elegant simplicity on the exterior.

The mansion has been updated throughout the years. Many of its intriguing period features remain, including ornate plaster moldings, wrought-iron doors, parquet floors, and wood paneling.

Front exterior of Bekins mansion
Front exterior of Bekins mansion

realtor.com

Den with wood paneling
Den with wood paneling

realtor.com

Living room with plaster molding
Living room with plaster molding

realtor.com

However, it’s also been renovated for 21st century life, with features like whole-house automation and a designer kitchen. The modern family wing, designed by architect Richard Manion, opens to an outdoor kitchen, a dining terrace, and a large saltwater pool.

Modern kitchen
Modern kitchen

realtor.com

Pool and outdoor kitchen
Pool and outdoor kitchen

realtor.com

The home had been on and off the market for a decade beginning in 2006, with the price hovering around $18 million. It was sold in 2016 for $16,162,500.

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Watch: Peek Behind the Scenes of Gene Simmons’ Jewel of a Family Home

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Today the 1-acre property includes rolling lawns and mature sycamore trees. The 11,920-square-foot mansion has seven bedrooms and 10 bathrooms. Moving into a mansion this size would likely be a lucrative project for the Bekins of today.

Spacious master bedroom
Spacious master bedroom

Among the home’s other extraordinary features are a formal office, third-story lounge, lower-level home theater, gym, and guest suite.

Home theater
Home theater

realtor.com

The home sits behind high hedges, thick walls, and ornate gates in one of the ritziest enclaves in Los Angeles, accessed by Bel-Air’s landmark East Gate.

Everyone who’s ever driven past that elegant part of Sunset Boulevard has gazed on those gates in awe. The Bekins house is an appealing alternative to the giant modern mansions going up in the area, absolutely move-in ready for anyone who wants a fully restored property with a bit of history.

Elegant gates
Elegant gates

realtor.com

  • For more photos and details, check out the full listing.
  • Homes for sale in Bel Air, CA
  • Learn more about Bel Air, CA

Source: realtor.com

Why Permanent Life Insurance Isn’t Right for Most People

For people seeking financial security in case of an untimely death, there are two main types of life insurance: term and permanent. The truth is, however, most people don’t need permanent life insurance.

You might assume permanent life insurance is the better choice because it never expires, as long as you pay your premiums. Perhaps that’s why most buyers end up with a permanent policy. The 2020 Insurance Barometer Study by LIMRA, a life insurance trade group, found 51% of policyholders have permanent coverage only, while 33% have term coverage only.

If you’re looking into a plan for yourself, don’t get swayed by those numbers. Term life insurance, particularly for young, healthy people, is more affordable and less complex than permanent life insurance.

There are some situations where permanent life insurance is the right choice. But those cases are few compared with the typical need for life insurance.

Comparing the options: Term vs. permanent life insurance

If people in your life would suffer financially if you suddenly died, life insurance is a worthy investment. The death benefit that insurers pay out upon your death can cover debts, replace your lost income or help pay for your children’s education.

There are various types of both term and permanent life insurance, but the broad strokes of the two main buckets are as follows:

  • Term life insurance covers a set number of years. Once the plan expires, so does your death benefit, so this policy pays out only if you die while your plan is active.

  • Permanent life insurance lasts for the rest of your life. These policies also typically act as an investment vehicle — as you pay your premium, your plan accrues a “cash value” that you can borrow against or pull money out of.

Permanent life insurance: pros and cons

Permanent life insurance is your best option if the money from it will be needed no matter when you die. For example, if you know you’ll have lifelong dependents, such as a child with a disability, or want to help your heirs pay hefty inheritance or estate taxes or even funeral costs, a permanent life insurance policy is probably the way to go.

But there are drawbacks:

Permanent life insurance is much more expensive than term life. Whole life, the most common type of permanent coverage, can cost 10 to 18 times more than 20-year term coverage for a healthy applicant buying a $500,000 policy, a comparison of average life insurance rates shows.

The higher price means you may not be able to afford enough permanent coverage to meet your family’s needs. And if you choose permanent life insurance but later find you can’t keep up with the monthly premiums, your policy may lapse and you’ll run the risk of having no coverage when you die.

Permanent life insurance is often more complex than term life due to its investment component. And while your policy may build cash value, insurance can be an expensive way to save for retirement. The cost of the insurance is a drag on your investment performance, so you should consider other options first.

“It’s especially important for young people to take advantage of IRAs, Roths and traditional 401(k)s,” says James Hunt, a life insurance actuary who advises the Consumer Federation of America. “Don’t buy whole life insurance unless you have plenty left over after maxing out your IRAs.”

The benefits of choosing term life insurance instead

Many people will “outgrow” the need for life insurance as they put away savings, pay off their debts and finish raising their kids. That’s what makes term life insurance compelling: It can cover you for the years you need it, and then you can reassess.

The lower cost of term life is always a benefit, but it’s especially important in volatile times such as a recession or pandemic, when you could easily lose your job and your ability to pay a high premium.

And while term life doesn’t have cash value, many policies now include “living benefits” that allow you to withdraw cash in certain circumstances, according to Jeff Root, founder of Rootfin, an insurance agency based in Austin, Texas.

With this option, “you can access the death benefit while you’re still alive and pay out if you have a cancer, heart attack, stroke or other qualifying events,” Root said in an email.

The point is for your policy not to pay out

If you outlive your term life insurance policy, that’s a good thing. As Root noted, “the goal is for term life insurance NOT to pay out — you don’t want to die early.”

All that being said, choose the life insurance plan that is best for you. You can compare quotes for term life insurance online, or speak to a trusted financial advisor to understand the costs of permanent life insurance if you decide that’s a better fit.

Source: nerdwallet.com

Northwestern Mutual Dedicates $20 Million to Advance Black Entrepreneurs through Venture Capital & a New Startup Accelerator

Northwestern Mutual Dedicates $20 Million to Advance Black Entrepreneurs through Venture Capital & a New Startup Accelerator

MILWAUKEE, Nov. 18, 2020 /PRNewswire/ — As part of its ongoing commitment to fostering diversity and inclusion and driving equity through innovation, Northwestern Mutual announced today new initiatives that will support Black startup founders nationally and locally in its headquarters of Milwaukee. The company’s venture capital fund, Northwestern Mutual Future Ventures, will dedicate $20 million to investing in startup companies founded by Black entrepreneurs. The company will also launch the Northwestern Mutual Black Founder Accelerator powered by gener8tor, a nationally ranked startup accelerator.

Northwestern Mutual. (PRNewsFoto/Northwestern Mutual)

Black founders receive less than one percent of venture capital funding annually and Northwestern Mutual and gener8tor are committed to investing in and supporting Black entrepreneurs to help close this funding gap and advance their companies. 

“At Northwestern Mutual we’re dedicated to supporting and promoting diversity not just within our company, but within our communities and the businesses we partner with nationwide,” said John Grogan, chief product and innovation officer, Northwestern Mutual. “Allocating $20 million is only the beginning – we will continue to invest in and provide opportunities for Black founders and are committed to providing access to capital and resources to help them grow their businesses.”

Northwestern Mutual Future Ventures is focused on advancing the company’s investment strategy of engaging startups whose technologies have the potential to transform how people experience financial security. The investment criteria for the $20 million Black founder funding allocation is aligned with Northwestern Mutual Future Ventures’ key strategic areas of focus:

  • Building for consumers’ changing financial preferences
  • Reimagining the client experience
  • The digital health revolution
  • Transformational analytics and technologies

“Innovative thinking is required to drive breakthrough solutions to close the racial equity gap, and by supporting Black founders through Northwestern Mutual Future Ventures and the new accelerator program in partnership with gener8tor, we can make a difference to close this funding gap,” said Abim Kolawole, vice president, digital innovation, Northwestern Mutual. “Our company’s Sustained Action for Racial Equity task force, which launched earlier this year, is looking at racism and inequality from every perspective. These initiatives will drive change and create impact within our company and communities.” 

The Northwestern Mutual Black Founder Accelerator powered by gener8tor is gener8tor’s first accelerator exclusively focused on advancing Black founders. The 12-week accelerator will run up to two cohorts of five companies a year and startups must be aligned to Northwestern Mutual Future Ventures’ investment areas of focus. The first cohort will begin in early 2021.

For more information on Northwestern Mutual Future Ventures, visit nmfutureventures.com. For more information on the Northwestern Mutual Black Founder Accelerator powered by gener8tor or to apply, visit northwesternmutual.com/blackfounderaccelerator.

About Northwestern Mutual
Northwestern Mutual has been helping people and businesses achieve financial security for more than 160 years. Through a holistic planning approach, Northwestern Mutual combines the expertise of its financial professionals with a personalized digital experience and industry-leading products to help its clients plan for what’s most important. With $290.3 billion in total assets, $29.9 billion in revenues, and $1.9 trillion worth of life insurance protection in force, Northwestern Mutual delivers financial security to more than 4.6 million people with life, disability income and long-term care insurance, annuities, and brokerage and advisory services. The company manages more than $175 billion of investments owned by its clients and held or managed through its wealth management and investment services businesses. Northwestern Mutual ranks 102 on the 2020 FORTUNE 500 and is recognized by FORTUNE® as one of the “World’s Most Admired” life insurance companies in 2020.

Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company (NM)(life and disability insurance, annuities, and life insurance with long-term care benefits) and its subsidiaries in Milwaukee, WI. Subsidiaries include Northwestern Mutual Investment Services, LLC (investment brokerage services), broker-dealer, registered investment adviser, member FINRA and SIPC; the Northwestern Mutual Wealth Management Company® (investment advisory and trust services), a federal savings bank; and Northwestern Long Term Care Insurance Company.

About gener8tor
gener8tor’s turnkey platform for the creative economy connects startup founders, musicians, artists, investors, universities and corporations. The gener8tor platform includes pre-accelerators, accelerators, corporate programming, conferences and fellowships.

gener8tor is not an affiliate or partner of Northwestern Mutual or its subsidiaries.

SOURCE Northwestern Mutual

For further information: Meghan Greco, 1-800-323-7033, meghangreco@northwesternmutual.com; Maggie Brickerman, maggie@gener8tor.com

Source: news.northwesternmutual.com

Why Grocery Shopping More Often is Saving Me Money

August 17, 2015 | Crystal Paine

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Why Grocery Shopping More Often is Saving Me Money

Saving You Dinero has an interesting post up about how she’s saving money by going to the grocery store multiple times per week and only buying exactly what she needs for the next few days.

While this may not work for your family (I like to simplify things by fewer trips to the store!), I love her outside-the-usual-frugal-advice-box ideas!

Read her post here.

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Source: moneysavingmom.com

How Much Does a Charge Off Affect Your Credit Score?

September 30, 2020 &• 4 min read by Gerri Detweiler Comments 1 Comment

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Disclaimer

Because 35% of your credit score relates to paying your debts in a timely manner, becoming so late on payments that the account is charged off can have a significant negative impact on your score. It also looks bad to future creditors because it indicates you might not pay all your bills. Find out more about charge offs and how they affect your credit score.

What Is a Charge Off?

A charge off occurs when a business writes debt off their books. It’s an accounting procedure that occurs for a specific reason.

When you owe a business money, the company counts that debt as an asset. The older the asset becomes, the less valuable it is because older debt is less likely to be collected. Eventually, the company has to take the asset off its books because the IRS doesn’t allow it to count this asset forever. That’s when a charge off occurs.

A charge off doesn’t mean that you don’t owe the debt. It only means that the company is no longer listing it as an open asset.

How Do Charge Offs Impact Your Credit History?

Companies report charge offs to the credit bureaus. When that happens, the applicable account is listed as charged off. Because you have to miss a large number of payments to have an account charged off, your credit score is likely already lowered due to a poor payment history. The charge off may lower it a bit more.

In addition to bringing your credit score down, a charge off looks bad to any future lenders that review your credit history. Lenders that might be willing to offer funds even though you have a lower credit score might balk if they see the charge off. That’s because a charge off demonstrates that you did not make any effort to pay the debt for some time.

How Long Does a Charge Off Stay on Your Credit Report?

Charge offs can stay on your credit report for up to seven years.

The older an item is on your credit report, the less impact it has on your score. That means you can raise your score even after a charge off if you manage finances and credit responsibly going forward. However, an unpaid charge off still looks bad to potential creditors and can limit your options when it comes to loans such as mortgages.

Can Creditors Attempt to Collect Charged Off Debt?

Charge offs don’t mean your debt was forgiven. You still owe the debt, and the company can still attempt to collect the debt.

In many cases, the original lender considers charged off debt to be “bad debt.” That means the lender doesn’t believe it has a good chance of collecting the debt and it’s not worth continuing to use internal resources to do so. Common actions taken by lenders at this point include selling the debt to a collections agency or contracting with a collection agency to collect the debt for them. Creditors can also take legal actions to collect these debts, including judgments.

Should I Pay Charged Off Amounts?

Making arrangements to pay a charged off account removes you from the collections process. That means you don’t have to worry about collectors or legal collection activity in the future. But it might also provide a positive impact for your credit report.

In some, admittedly rare, cases, you may be able to negotiate with a creditor to remove the charge off from your credit report if you pay the balance owed. Even if that’s not the case, though, it could be worth making payment arrangements.

Once you pay a charged off account, the creditor changes the item on your credit report so it shows up as a charge off that was paid. It’s still a negative item as far as timely payments go, but it demonstrates that you do attempt to pay all your debts. That can make you appear to be a less risky borrower in the eyes of some lenders.

Should I Pay a Charge Off in Full or Settle?

In some cases, creditors will agree to accept less than the amount you current owe in payment for a charged off balance. Many times, the balance is inflated by finance fees, late charges, and other expenses, leaving the creditor room to accept a lower amount. Plus, if it comes down to partial payment or no payment, creditors may be willing to accept what you can pay.

However, this can come with one disadvantage. The amount the creditor agrees not to collect from you is considered forgiven debt. Many forgiven or canceled debts are considered income by the IRS, which means you may owe taxes on them come tax time. Consult with an attorney or tax adviser before agreeing to partial debt forgiveness.

Keeping an Eye on Your Credit Report and Score

Whether you’re dealing with a current charge off or you’re working to continue raising your credit score years after a charge off, knowledge is important. When you know what’s going on with your credit history, you can work smarter to improve your score. Sign up for ExtraCredit from Credit.com to get 28 FICO scores and a detailed look at how you’re doing across the five factors that feed your score.

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How to Focus on More Experiences Over Things This Holiday Season

The holiday season is in full swing and this is one of my favorite times to remind myself to focus on more experiences and memories with loved ones. It’s easy to feel the stress of having to provide and pay for gifts and other costs over the next few weeks. I know it sounds cliche to say that the holidays are about more than just gifts, but it’s true.

This year in particular has been difficult on a lot of people and when I think about protecting my mental health and ending the year on a good note, I don’t think about the latest iPhone or a PlayStation 5. Things are just things, and while they can help a little, it’s more important to focus on experiences. Plus, shifting your focus from things to experiences can help you save money in the long run.

So how do you do this especially when the holiday season looks so different this year? Here are some easy ideas to start with.

Create a Holiday Bucket List

I love creating bucket lists. I have a bucket list of things I want to do before I turn 30. While I don’t get all worked up if I can’t check something off my bucket list, it does make me feel like I’m trying to live a more intentional life. Creating a holiday bucket list can give you something to look forward to instead of just buying gifts.

Even though we’re able to do less this year, you can still get creative and come up with a list of experiences you want to enjoy by yourself or with loved ones. Maybe you have a favorite holiday movie that you love to watch each year. Or, perhaps your kids want to go sledding at the first sign of snow that sticks. Maybe you want to spend your holiday break learning a new skill or picking up another hobby.

Narrow down a few things that bring you joy and allow you to safely make memories with loved ones. Then, try to tackle as many things on your holiday bucket list as you can.

RELATED: 7 Financial Bucket List Items to Achieve Before 30

Give Your Time

Another way to focus on experiences over things this holiday season is by giving your time. See if you can volunteer somewhere whether it’s at church, a community organization or a local food pantry. Give away meals to families in need. Lend your skills to decorate the outdoor storefront for a local business. Teach music or art lessons to kids online over video chat if you have those skills. Offer to pet sit for a friend or neighbor if they need it.

If you stop and look, you’ll probably see that there are so many ways to give your time and serve others this holiday season. Focus on people in your family or community that have a need and see what you can do to help. If you can lend a helping hand or solve a problem for someone, this could really make their day.

RELATED: Why Giving Makes You Better With Money

Reconnect With Loved Ones

Fewer people will be traveling this holiday season. That doesn’t mean you can’t still reconnect with loved ones. Earlier this year my grandmother on my dad’s side passed away. I was sad to lose her but also grateful that I was able to visit her last year over Christmas break and catch up.

Now that travel is limited and most areas are on a soft lockdown, I realize that you can still connect with loved ones in other ways. A simple phone call could make a difference. You can also host video calls with family and I know Zoom made calling free for all users on Thanksgiving day.

It’s not the most ideal situation but thanks to modern-day technology, you can still stay in touch with loved ones in some way. You can also consider sending some Christmas cards to family members and friends this year if you’ve never done this in the past.

Here’s how you can focus on experiences over things this holiday season! Click To Tweet

Keep Kids Busy With Indoor and Outdoor Fun

If you have kids, you know how hard it can be to keep them busy during the holiday break. It will be even more challenging this year due to more limitations. Still, this could be a time where you get creative and find fun ways to make memories with your family indoors and outdoors.

This could mean having a family game night each week this month or hosting a gingerbread house decorating competition. It could involve baking cookies for the neighbors or playing a game in the yard on a warmer day.

You can pick up DIY ornament kits from the dollar store and have kids decorate their own ornaments for the Christmas tree. Or camp out in the living room with hot chocolate and watch all 3 of The Santa Claus movies back-to-back.

Summary

There’s still plenty of fun memories to be made this year when you try out some of these creative experiences. When you focus on more experiences over things this holiday season, it can help you avoid overspending and getting into debt. Plus, you think about what really creates happiness in your home long-term.

How will you be prioritizing experiences this holiday season even given the unique circumstances?

Source: everythingfinanceblog.com

Effective tax rates in the United States

I messed up! Despite trying to make this article as fact-based as possible, I botched it. I’ve made corrections but if you read the comments, early responses may be confusing in light of my changes.

For the most part, the world of personal finance is calm and collected. There’s not a lot of bickering. Writers (and readers) agree on most concepts and most solutions. And when we do disagree, it’s generally because we’re coming from different places.

Take getting out of debt, for instance. This is one of those topics where people do disagree — but they disagree politely.

Hardcore numbers nerds insist that if you’re in debt, you ought to repay high-interest obligations first. The math says this is the smartest path. Other folks, including me, argue that other approaches are valid. You might pay off debts with emotional baggage first. And many people would benefit from repaying debt from smallest balance to highest balance — the Dave Ramsey approach — rather than focusing on interest rates.

That said, some money topics can be very, very contentious.

Any time I write about money and relationships (especially divorce), I know the debate will get lively. Should you rent a home or should you buy? That question gets people fired up too. What’s the definition of retirement? Should you give up your car and find another way to get around?

But out of all the topics I’ve ever covered at Get Rich Slowly, perhaps the most incendiary has been taxes. People have a lot of deeply-held beliefs about taxes, and they don’t appreciate when they read info that contradicts these beliefs. Chaos ensues.

Tax Facts

When I do write about taxes — which isn’t often — I try to stick to facts and steer clear of opinions. Examples:

  • The U.S. tax burden is relatively low when compared to other countries.
  • The U.S. tax burden is relatively low when compared to U.S. tax burdens in the past.
  • Overall, the U.S. has a progressive tax system. People who earn more pay more. That said, certain taxes are regressive (meaning that, as a percentage of income, low earners pay more).
  • A large number of Americans (roughly one-third) pay no federal income tax at all.
  • Despite fiery rhetoric, no one political party is better with taxing and spending than the other. The only period during the past fifty years in which the U.S. government had a budget surplus was 1998-2001 under President Bill Clinton and a Republican-controlled Congress.

Even when I state these facts, there are people who disagree with me. They don’t agree that these are facts. Or they don’t agree these facts are relevant.

Also, I sometimes read complaints that the wealthy are taxed too much. To make their argument, writers make statements like, “The top 50% of taxpayers pay 97% of all federal income taxes.” While this statement is true, I don’t feel like it’s a true measure of where tax burdens fall.

I believe there’s a better, more accurate way to analyze tax burdens.

Effective Tax Burden

To me, what matters more than nominal tax dollars paid is each individual’s effective tax burden.

Your effective tax burden is usually defined as your total tax paid as a percentage of your income. If you take every tax dollar you pay — federal income tax, state income tax, property tax, sales tax, and so on — then divide this total by how much you’ve earned, what is that percentage?

This morning, while curating links for Apex Money — my second personal-finance site, which is devoted to sharing top money stories from around the web — I found an interesting infographic from Visual Capitalist. (VC is a great site, by the way. Love it.) They’ve created a graphic that visualizes effective tax rates by state.

Here’s a summary graph (not the main visualization):

State effective tax rates

As you can see, on average the top 1% of income earners in the U.S. have a state effective tax rate of 7.4%. The middle 60% of U.S. workers have a state effective tax rate of around 10%. And the bottom 20% of income earners (which Visual Capitalist incorrectly labels “poorest Americans” — wealth and income are not the same thing) have a state effective tax rate of 11.4%.

Tangent: This conflation of wealth with income continues to grate on my nerves. I’ll grant that there’s probably a correlation between the two, but they are not the same thing. For the past few years, I’ve had a low income. I’m in the bottom 20% of income earners. But I am not poor. I have a net worth of $1.5 million. And I know plenty of people — hey, brother! — with high incomes and low net worths.

It’s important to note — and this caused me confusion, which meant I had to revise this article — that the Visual Capital numbers are for state and local taxes only. They don’t include federal income taxes. (Coincidentally, I made a similar mistake a decade ago when writing about marginal tax rates. I had to make corrections to that article too. Sigh.)

GRS readers quickly helped me remedy my mistake, pointing to the nonprofit Tax Foundation’s summary of federal income tax data. With a bit of detective work, I uncovered this graph of federal effective tax rates by income from the Peter G. Peterson Foundation. (Come on. What parent names their kid Peter Peterson? That’s mean.)

Federal effective tax rates

Let’s put this all together! According to the Institute on Taxation on Economic Policy, this graph represents total effective tax rates for folks of various income levels. Note that this graph is explicitly comparing projected numbers in 2018 for a) the existing tax laws (in blue) and b) the previous tax laws (in grey).

TOTAL effective tax rates in the U.S

Total Tax Burden vs. Total Income

Here’s one final graph, also from the Institute on Taxation and Economic Policy. This is the graph that I personally find the most interesting. It compares the share of total taxes paid by each income group to their share of the country’s total income.

Tax burden vs. total income

Collectively, the bottom 20% of income earners in the United States earned 3.5% of total income. They paid 1.9% of the total tax bill. The top 1% of income earners in the U.S. earned one-fifth of the nation’s total personal income. They paid 22.9% of total taxes.

Is the U.S. tax system fair? Should people with high incomes pay more? Do they pay more than their fair share? Should low-income workers pay more? Are we talking about numbers that are so close together that it doesn’t matter? I don’t know and, truthfully, I don’t care. I’m concerned with personal finance not politics. But I do care about facts. And civility.

The problem with discussions about taxation is that people talk about different things. When some folks argue, they’re talking about marginal tax rates. Others are talking about effective tax rates. Still others are talking about actual, nominal numbers. When some people talk about wealth, they mean income. Others — correctly — mean net worth. It’s all very confusing, even to smart people who mean well.

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Final Note

Under the Digital Accountability and Transparency Act of 2014, the U.S. Department of the Treasury was required to establish a website — USASpending.gov — to provide the American public with info on how the federal government spends its money. While the usability of the site could use some work, it does provide a lot of information, and I’m sure it’ll become one of my go-to tools when writing about taxes. (I intend to update a couple of my older articles this year.)

U.S. federal budget

The USA Spending site has a Data Lab that’s currently in public beta-testing. This subsite provides even more ways to explore how the government spends your money. (I also found another simple budget-visualization tool from Brad Flyon at Learn Forever Learn.)

Okay, that’s all I have for today. Let the bickering begin!

Source: getrichslowly.org