Finance

How to Prepare for a Recession

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A person preparing for recession

It was sobering news this summer when Bank of America economists put out projections of a “mild” recession to take place this year. That projection has since been pushed back slightly, but the fact remains that economists believe a recession is very likely in the near future. 

What does that mean to regular people, as opposed to economists? Well, record inflation rates coupled with high personal debt loads and a waffling jobs market have put many people on edge. So far, unemployment has remained low, and job openings have remained high, but some sectors (such as tech) have had increasing layoffs of late. 

Also: the Federal Reserve has aggressively raised interest rates in its last few meetings, and more increases are expected in order to try to put the brakes on continued inflation. Unfortunately, sometimes those moves by the Central Bank can push a teetering economy into a recession zone.

Prepare Now in Case a Recession Happens

When a recession is potentially looming, it is prudent to make sure your finances are fully prepared to deal with any economic conditions that may come along. Here are some steps to take to secure your financial situation, no matter what the economic weather may bring.

1) Save as Much as You Can

The primary concern in preparing for a recession is that the economy is contracting: companies hire fewer people, wages stagnate, and the possibility of losing your job can increase. That is why your number-one move right now is to set aside as much money as you can in savings or in an emergency fund. If you can, save at least a few months’ worth of income in your bank account. That way you can keep yourself afloat in the event of a job loss during the recession. 

2) Take Down Risky Investments

Right now is the time to reduce your exposure to risky or speculative investments. There may be a time and place for these investments in certain economic climates, but you want to be as far away from them as you can get when things start to get dicey. This is why it is highly recommended that you consider what you have your money in right now and perhaps cash out those positions that are overly speculative. 

3) Look for a Stable Career or a Side Hustle

If you already work in an industry that is stable, then great; count yourself among the lucky ones. But as the economy destabilizes, jobs that aren’t very secure — hospitality, retail, restaurants, entertainment, and manufacturing are among the sectors that feel the punch first — are the first place where contractions take place. 

It’s not always possible to rethink an entire career, but now might be the perfect time to spread yourself a little thin and start your own side hustle. Pursue any small-business idea you have, or create an always-in-need service business, whether housecleaning, babysitting, driving, delivery, or security. 

4) Reduce or Eliminate Debt Pre-Recession

It is a major problem to try to deal with debt when a recession hits. We may feel comfortable carrying a certain amount of credit card debt when we are safely employed and the economy is simmering. But debt quickly becomes a noose that tightens around your neck when interest rates are climbing, inflation is driving prices up, and your job security wavers.

Now is the time to consider a debt consolidation loan or paying off all your debt in another way. You can always try the “snowball method” of paying the smallest debts first or the “avalanche method” of paying the highest-interest debts first. But if you already feel squeezed, those methods might not work for you. Look into whether you qualify for a debt consolidation loan, which can usually offer you a lower interest rate than what you are paying now — and you can wipe out your debt in one fell swoop with the loan. 

5) Speak with a Financial Advisor

Sometimes the best thing to do is to speak with an expert. If you have a financial advisor that you trust, then you should consider speaking with that person about your current state of affairs. He or she can provide guidance about which steps are most prudent for you to take at a time like this. 

If you’re struggling with credit card debt, take action now, and speak with an advisor at Brice Capital. Ask if they can help you get rid of your high-interest credit card debt before you find yourselves in the middle of a recession.

4 Tips for Setting Your Financial Goals

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Glass jars for storing money to achieve your financial goals

Whether you’re looking to buy a home or get rid of debt, you’ll need to set your financial goals. This allows you to have clear objectives that you are working towards in the short term and long term. So here are four money tips to help in setting your financial goals.

Clearly Define Your Financial Goals

The first step to setting your financial goals is specifying what you hope to accomplish. These goals must be specific, measurable, and have a set deadline. For example, paying off your student debt of $15,000 by the end of next year is a great financial goal to strive for. Setting vague goals, such as just having more money, will likely not give you an end goal to aim for, which makes it easy to lose sight of what you are working towards.

Make Sure Your Financial Goals Are Achievable

It is always good to challenge yourself, but setting financial goals that are too extreme means, you’re likely setting yourself up for failure. It is also common for those still starting out on their journey to financial freedom to become overwhelmed by setting too many financial goals at the same time. Therefore, it is advisable to take small but consistent steps toward your goals instead of trying to achieve them all at once. As you start achieving these smaller goals, you can progressively begin taking on more challenging ones.

Figure Out Your Budget

Before rushing into achieving your financial goals, you must first figure out where you stand in terms of expenses and spending habits. This means establishing a budget to track your spending and see where every dollar is going. A budget makes it easy to identify opportunities for saving money and how much you can have left over at the end of each month. From there, you can get an idea of what financial goals are doable and how long it would take to achieve them.

Monitor Your Progress

Since your goals will often have a set deadline or timeframe, you should constantly be monitoring your progress and adjusting your goals as you go along. When you go through a significant life change of any kind — moving, a new job, starting a family, or buying a home — that is a key time to re-evaluate your finances and revise your goals. And of course, there may be some unexpected bumps in the road that can hinder your progress. Those, too, require a new look at your money, how you are spending it, and how you are saving it.

Above all, keep one single goal in mind — retiring young? Buying land and building your own home? Starting your own business — and make sure your spending and saving habits are always pointed in that direction? Long-term planning, more often than not, yields long-term results.

What Social Security Changes are Coming in 2022?

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What changes are coming to social security in 2022

With the new year approaching rapidly, there are quite a few social security changes coming in 2022. Here are some of the main changes happening next year and how they could affect your benefits moving forwards especially for those planning their retirement.

Social Security Payments Will Increase

First, the Social Security Administration (SSA) announced that Social Security payments will increase by 5.9% in 2022. This increase is aimed at combating inflation by helping people maintain their purchasing power. The 5.9% increase marks the largest Social Security cost-of-living adjustment (COLA) in almost 40 years. Given the current state of the economy, this increase is necessary for seniors to be able to retire more comfortably. This is especially true given that the U.S inflation rate rose to 6.8% in 2021, largely due to the global pandemic.

Full retirement age is increasing to 67

The full retirement age will be increasing to 67 in 2022 for those born in 1960 or later. The option to start taking Social Security retirement benefits at age 62 is still available, however, this will result in reduced monthly payments. For example, those who opt for early retirement at age 62 will receive a 30% reduction from the full retirement age benefit amount. Those who choose to wait until age 70 will receive $4,194 per month in Social Security benefits in 2022.

Maximum Social Security Tax Limit Will Increase

In 2022, the maximum amount of earnings subject to Social Security tax will increase from $ 142,800 to $147,000. Most workers pay 6.2% of their earnings into the Social Security system each year until they exceed the maximum taxable amount. Those with an income above $147,000 will not have Social Security tax deducted from their salaries and will notice increased paychecks.

The amount of your Social Security benefits will be taxed according to your income level. If your individual income is between $25,000 and $34,000, 50% of your benefits will be taxed. For married couples, this income range becomes $32,000 to $44,000. Naturally, the percentage of Social Security benefits that are taxed will increase as your income increases. Those with higher incomes will have 85% of their Social Security benefits be taxable.

To learn more about your Social Security benefits, you can visit ssa.gov to get an estimate of what to expect in terms of benefits after retirement.

Are Rent-to-own Homes Worth it?

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is rent to own worth it?

Rent-to-own homes are becoming increasingly popular among people looking to purchase a home but are suffering from bad credit scores. While rent-to-own contracts can be mutually beneficial to both buyers and sellers, there are several risks associated with them that should be kept in mind. So, let’s take a look at the benefits and drawbacks of rent-to-own homes to see if they are worth it.

Rent-to-own allows prospective buyers to lease a property for a certain period of time with either an option or commitment to buying it once the lease ends. Both the buyer and seller agree on a purchase price for which the buyer can purchase the home in the future. The buyer is usually required to pay monthly rent and an extra amount which acts as part of their down payment. Eventually, these extra payments will be credited towards the purchase price at the end of the contract. This extra amount is usually nonrefundable and may be lost if the buyer does not end up purchasing the home.

Rent-to-own homes tend to be appealing to some buyers that can’t qualify for a traditional home loan due to bad credit. It also makes sense in markets where home prices are increasing, since the purchase price of the home is usually set a few years in advance. Renting the home before purchasing also allows the buyers to test out living in the house.

However, not paying rent on time or deciding not to purchase the house may cause you to lose all of your previous payments. In addition, rent-to-own contracts do not usually follow a standard template, therefore it is highly recommended to have a real estate attorney take a look at it. Rent-to-own contracts can also be very risky for buyers with poor credit and that are looking to purchase a home. Some sellers will intentionally rent out homes to potential buyers who are struggling financially and will likely be unable to pay the required amount. This means that the buyers will lose a large portion of their money and have nothing to show for it once the contract ends.

Overall, Rent-to-own homes could be worth it for those who are unable to get a traditional home loan and are expecting property prices to rise in the upcoming years. However, this route is a risky one for those who find it difficult to stay on top of their finances.

4 Ideas for a Sustainable Labor Day Weekend

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4 Ideas for a Sustainable Labor Day Weekend

Time has flown this year! Labor Day Weekend is right around the corner, which means that the unofficial end of summer is just a few weeks away. Labor Day is all about celebrating the economic and social achievements of American workers across the country.

It’s also a great chance to take advantage of the three-day weekend. What better way to celebrate than by planning fun activities for the entire family?

Here are some of the best ideas for enjoying a long holiday weekend while doing your part to be eco-friendly and sustainable.

1. Stay Local

For most families, Labor Day is a great time to get in a final summer getaway. While it’s always nice to visit a new destination, when’s the last time you explored your local community? Chances are that there are all sorts of hidden gems and fun activities that you and your family haven’t had a chance to enjoy.

Staying local is one of the best ways to reduce your carbon footprint. Most means of transportation require the use of fossil fuels, which disperse harmful chemicals into the atmosphere.

If you do plan to travel, consider carpooling to save money while also saving the environment.

2. Always Follow the Three Rs

No matter where this Labor Day takes your family, always follow the three Rs: reduce, reuse, and recycle. Whether you’re going on a hike, to the beach, or having a backyard barbeque with friends and family members, make eco-friendly decisions. Cut down unnecessary expenses to save money.

Some of the best ways to celebrate the holiday sustainably include:

  • Reusable or recyclable cutlery and dishes
  • Disposing of items properly and recycling as much as possible
  • Use simple decorations
  • Use food scraps for compost

Doing your part to protect the earth is a great decision this Labor Day.

3. Try Plogging

Want to burn some energy and make good use of the day? September 2021, Keep America Beautiful is hosting the 3rd Annual TrashDash. This plogging fun run is a great way to join others in a global movement to protect and clean up our planet.

And in case you don’t know, plogging is when you pick up litter while jogging. This is a fun activity that everyone can enjoy.

Be sure to get your plogging practice in, and remember, every piece of litter you pick up ensures a safer and cleaner community.

4. Volunteer

There are tons of ways to volunteer on Labor Day and beyond. One of the most popular volunteer programs is the Great American Cleanup. This is the country’s largest community improvement program that runs through October 18.

This program encourages adults and kids to do their part in cleaning up local beaches and parks. You can even plant a community garden!

Final Thoughts

The last year has been nothing short of challenging. Make this Labor Day Weekend one to remember by doing your part to keep America beautiful and free of trash and litter. Sustainably celebrating the unofficial end of summer fun means that the whole family can have fun while making our planet better.

The Real Cost of Paying Just the Minimum Card Payment

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The Real Cost of Paying Just the Minimum Card Payment

Making your credit card’s minimum payment is better than no payment at all. It’s also better than racking up late fees and falling behind. But if you’re looking to pay down your debt, paying the minimum card payment isn’t going to get you very far.

Paying just the minimum amount can cost you hundreds, possibly thousands of dollars in interest charges. Here’s why the minimum payment can cause major problems now and in the future.

It Will Take Longer to Pay Down Your Balance

Credit card issuers typically set very low minimum payment requirements. Why? So that they can make money off fees and interest charges.

Most issuers will ask for a fixed amount, such as $25 or $30 a month, or a set percentage of the balance, whichever amount is greater. There are also cards that only require you to pay as little as 1% of the balance, plus fees and accrued interest.

While these are great options if you’re in a financial bind and need to put money towards other expenses, paying the minimum card payment is not a smart long-term solution.

Look at the “Minimum Payment Warning” on your monthly statement. These numbers show how much interest you’ll pay and how much time it will take to pay off the current balance if you pay just the minimum.

If you’re serious about paying debt and minimizing interest paid, pay more each month. Paying twice the minimum amount cuts the repayment period in half.

More Money Towards Interest

Unless you have a 0% APR card, interest is tacked onto your running balance. By making just the minimum payment, you’ll find that the amount is barely enough to cover last month’s interest. You’ll see little to no change to the principal balance.

The cycle of just paying interest fees becomes even worse if you continue to charge items to the card. The end result? You fall further behind and owe even more interest.

By paying just the minimum amount, you’re taking two steps forward and one step back.

Your Credit Score May Drop

When your credit card balances increase, your credit score may drop. This is because your credit utilization ratio increases. Ideally, this ratio should be no more than 30% of the credit limit on the card.

Credit utilization is a major factor in determining your worthiness as a borrower. This means that keeping high balances by paying just the minimum card payment could cause your score to drop.

Having a low credit score:

  • Makes it harder to qualify for loans
  • Means higher interest rates for future loans or credit cards
  • Could affect your ability to find a job
  • Could impact your ability to rent a home

The best way to protect your credit score is to pay more than the minimum payment and to avoid getting into further credit card debt.

The Minimum Means Major Problems

The real cost of paying just the minimum card payment is a hefty one. Depending on your balance and interest rate, you could be throwing away hundreds, maybe even thousands of dollars towards interest charges.

Take control of your finances and get serious about paying down debt. Pay as much as you can on your highest interest card, and then move on to other debt. Check options to gain sustainable money from home. The less debt you have, the more financially independent and secure you’ll be.

3 Ways to Make Your Business Eco-Friendly

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People in a meeting talking about eco-friendly business

Businesses across industries have been shifting to make eco-friendly businesses. Such changes can benefit your business financially and achieve your financial goals, while also enabling you to differentiate yourself from competitors. Reports by EY and Nielsen cite that more than 60% of consumers are more inclined to buy a product or survey if it’s sustainable.

To become an eco-friendly business, you have to focus on decreasing the negative impact of your business on the environment. This can be achieved through incorporating sustainable business practices, supplying more green products or services, and becoming greener than conventional competitors.

Embrace greener methods of transportation

In the U.S., transportation accounts for 28 percent of overall greenhouse emissions. To reduce your business’s carbon footprint, you can encourage employees to use green means of transportation.

The greenest transport methods available are bikes and trains, which cut emissions by circa 75% and 80% respectively compared to car trips. Moreover, car-sharing initiatives––which allow the renting of cars without owning one––can decrease the number of cars on the road, ultimately reducing carbon emissions as well.

There are several ways you can incentivize employees to use greener modes of transport. You can purchase public transport passes for your employees, enable (short-distance) business travels through car sharing, and offer gift vouchers for sports equipment to encourage employees to walk or cycle.

Use sustainable packaging

Green packaging makes use of materials makes use of sustainable materials that don’t require a lot of energy to produce (or discard). These often include recyclable and biodegradable materials––as opposed to more harmful packaging materials like plastic. You can also save money by switching to a sustainable lifestyle.

The use of sustainable materials can have many advantages for your company. These can help reduce your carbon footprint, make disposal of packaging materials easier, and ultimately improve the way your brand is perceived by consumers. A survey conducted by the Recycled Paperboard Alliance found that 81% of consumers felt better about purchasing a product whose packaging constituted of such materials. Moreover, a separate study found that one-third of consumers cited environmentally friendly packaging as their most important purchase criterion.

To implement this change, there are several eco-friendly packaging materials you can use as viable alternatives for your products. Biodegradable air peanuts, cornstarch packaging, recycled cardboard and paper, and organic fabrics are some environmentally friendly packaging options that can be used.

Integrate eco-friendly values into the company

For long-term change towards greener company practices, sustainability has to be engrained within your company’s vision. The best way to do this is by making a green mission statement as part of your eco-friendly business’s overall company culture. Creating an environmental mission statement involves establishing your ‘why’s’ and goals for your green mission statement, and implementing these within your core values, core purpose, and long-term vision.

A 2019 study has found that the presence of a green organizational culture predicts a company’s green performance as well as its competitive advantage. Additionally, a separate study conducted on Turkish companies found that factors influencing sustainable practices have a positive relationship with the presence of a green organizational culture. As such, having a company culture that invests in green practices can help you reap the benefits of eco-friendly businesses.

Making the change

As a business that seeks to successfully reduce its carbon footprint, making the shift to becoming an eco-friendly company involves more than just making the switch away from plastic coffee cups. It requires a sustainable change in company values, business practices, and supply chain operations. While this may seem like a daunting venture, taking small steps over an extended period of time can make environmental sustainability an easy and accessible process.