How I Travel Full-Time By RV And Boat With My 2 Dogs

Traveling with a dog is a lot of fun, but there are some important things to consider so you and your pet are prepared. 

How I Travel Full-Time By RV And Boat With My 2 Dogs

How I Travel Full-Time By RV And Boat With My 2 DogsSometimes people think we are crazy for bringing our dogs on our adventures, but I wouldn’t have it any other way. For us, it’s like bringing your kids along, haha! 

Since we’ve been doing this for several years and in so many different ways, I figured I would be a good person to share what it’s like traveling with a dog for anyone who is interested in learning how it’s done.

You might be interested in going on a roadtrip with a dog. Maybe you want to sail or RV full-time with them, or perhaps you just want to take your furry companion on your next week long vacation. 

Whether you want to travel full-time with your pets, or if you want to just go on the occasional trip, hopefully my experiences will help you.

Traveling with a dog has been a huge learning process for me.

We’ve had to go slow and learn what works for our dogs. I say this because there is no single right way to travel with pets. So, you may have to adjust a little for your specific animal, as all animals are different and have different needs. We even see differences between our two dogs in how they travel.

Before I go on, let me backup a little bit. If you follow me on Instagram, then you already know this – I travel full-time with my two dogs. We’ve been traveling with them for years now, and they are pretty used to it whether we are in a tent, Jeep, RV, campervan, or sailboat.

Our dogs have been to several new countries, many new states, national and state parks, hiked some of the tallest mountains in the U.S., swam in beautiful Caribbean waters, and more.

We absolutely love our dogs, and we go to the extreme to make sure they are happy and comfortable with what we are doing.

While we love bringing our dogs everywhere with us, that does not mean it’s easy. Traveling with a dog takes some serious planning, and it is not something to take lightly.

Everything takes a little bit longer due to bathroom breaks, walks, and all the planning, so it definitely takes more effort.

I have received a ton of questions over the years on how we keep everyone happy, us and the dogs, while we travel. Of course, my experiences won’t apply to all dogs, as all dogs are different. But, hopefully you will find some ideas or tips that will make traveling with pets a little easier on everyone.

Content related to traveling with a dog:

 

traveling with dogs by boat

The four of us on SV Paradise (our boat)

About our dogs, Sailor and Mr. French.

Our bigger dog is Sailor, and she is about 85 pounds and is over 13 years old. Our smaller dog is Mr. French, and he is a 15-pound French Bulldog who is over 11 years old. We’ve had them since they were puppies (we adopted both of them) and love them so much!

Mr. French is happy to be wherever we are, and he doesn’t care much for being outside so he makes the perfect pet for an RV or boat. He enjoys sailing and likes to be right at the helm with us.

Sailor enjoys all of the smells when we travel to new places as well as the attention and petting from being a big dog at a campground, marina, or anchorage. Due to her bigger size, we have to do more to make sure she is comfortable and happy, but it is all worth it. She is a great hiking buddy and is very friendly and social with new people.

Honestly, while traveling with a dog is more work, I can’t imagine what it would be like to travel without them. They bring us so much happiness and love, so it is well worth it to us.

When traveling with a dog, here are my tips so that both the humans and animals are happy and healthy.

Here’s how to start traveling with a dog.

 

1. Take it slow when introducing your pets to travel.

If you want to start traveling with a dog, then I recommend taking it slow.

Whether you are going to live in a boat or an RV full time, or are just going on a weeklong road trip, I recommend slowly introducing your dog to travel.

This is the top tip we’ve heard from others who travel with their dogs, and it’s very true.

So, instead of throwing your pets into a long trip, you may want to start with something much smaller, so that they can get used to the process. You will be completely changing their routine, and many pets are used to following routines each day.

I also recommend trying to keep some of their routines as close to normal as possible, such as feeding times and when you let them out for exercise and bathroom breaks.

For example, when we started sailing, numerous people suggested starting the dogs out at a marina, then doing day sails, then an anchorage, and go from there. So, that’s exactly what we did. We didn’t want them to be afraid of sailing or make them afraid to get on the boat, so we took it as slow as possible. That’s worked out well for us, and we recently did a 9-day sail with them, and they acted like it was no big deal at all.

We got them very comfortable with being on the boat, and we haven’t had to quit just yet, so I would say it was a huge success.

If you are not planning on traveling full-time, but want to go on a road trip with your dog, I recommend not traveling too far at first, especially if they’re not used to being in the car. Slowly introducing them to travel is good so that they don’t get scared or stressed out. So, you may want to start by bringing them to a park nearby to help them with their nerves, as some dogs can be quite anxious!

 

traveling with dogs internationally

This is what a normal day on the water looks like.

2. Know the rules and customs of where you are going.

Not every place you go to will be pet friendly.

When traveling with a dog, you will quickly learn that not every park or trail is open to dogs. Most national parks are this way and don’t allow dogs on the trails.

However, there are some national parks that do. This is why I recommend doing some research ahead of time so that you are not surprised or frustrated when you get to your destination.

No matter where you are traveling with a dog, respect the land and the people there. You should always pick up after your dog, even if that means that you will have to hike for hours with a dog waste bag. You should not let your pets trample over delicate areas, and don’t let them approach people who don’t want to be bothered.

The same also applies to campgrounds and hotels. You will want to make sure that you find dog friendly camping, dog friendly hotels, and more. You’ll want to call in advance to make sure the weight and breed are acceptable.

 

3. How to do veterinarian visits.

Going to the vet is an important part of being a pet owner, and you still need to do it when you’re traveling with a dog.

I receive a lot of questions about how we handle this.

Our dogs still see the vet each year, and sometimes more often if there are any issues. They just usually see a new vet each year. If we’re in the same place for longer than a year, then they might see the same vet more than once.

Our dogs have never had an issue going to a new vet, and they go each time with no problem. We simply make sure to bring all of their paperwork with us so that there is no confusion as to what was done at a previous appointment.

When it comes to medications, we try to stock up on what we need for the whole year. 

If you’re going to start traveling with a dog, especially full-time here are some thing you’ll want to bring up with your vet to prepare:

  • Getting your dog microchipped. This is a great thing to have, and if you are going to a new country then it is usually mandatory.
  • Rabies vaccination – this is normal.
  • Seeing what vaccinations and medications are recommended or required in the area you will be traveling to in the next year. This can vary even state by state!

 

4. How to visit new countries with dogs.

When visiting new countries with our dogs, there have been a lot of steps and hurdles to go through.

Here are some of the preparations you may need to make when traveling with a dog to a foreign country:

  1. Contact the government veterinarian agency of the country you are seeking to visit and ask for an up-to-date list of requirements for bringing a pet.
  2. Bring your dog to a veterinarian where you are currently located and get all of the required shots, tests, paperwork, etc.
  3. Visit the USDA or the equivalent in the country you are in to get your paperwork certified and stamped.
  4. Send all of the required paperwork back to the government veterinarian in the country you are desiring to go to and have them approve it. You will also need to get a permit from them for your pet to enter the country.
  5. Then, once you get to the new country, you may have to bring your pet to the government vet so that they can make sure it is the same pet on the paperwork, as well as to make sure the pet is healthy.

Now, these aren’t the exact steps for every single country, as every country has its own process.

The process can take several months from beginning to end, so you will want to make sure that you budget for plenty of time to get everything ready. When you’re boating with dogs, especially around the Caribbean, you can spend a lot of time researching this kind of stuff.

You’ll want to make sure you follow the steps exactly as detailed by the country you are going to, because doing them out of order (such as getting the vaccinations in the wrong timeline) will invalidate the process. This can be a costly and timely mistake, but it’s avoidable.

When you’re traveling with a dog or another pet, I also recommend:

  • Try to bring as much food for your pet as you can. We usually bring several months of dog food with us, as there may not be as many choices where you are going.
  • Keep your dog on a leash when it is required, if there are people near, and so on. And, always follow the leash rules of the area you’re visiting. Not everyone in other countries and areas like dogs, so you will want to keep that in mind.
  • When you go to the vet, try to get any standard medications that you may need. For example, our bigger dog can sometimes have an ear issue that requires a liquid steroid that you insert in her ears. We always try to have at least one backup on us so we don’t have to try to find a vet, as it can be quite difficult in foreign countries to get your dog to a vet if you don’t have a car, and not all islands have a vet either.
  • In some countries and/or areas, you may have to keep your pet documents on you at all times as you may be asked to show it at random times.

While it is a lot of work to bring your dog to a new country, it is possible and most government vets are super nice and helpful.

Some helpful resources for more information on each specific country include:

 

Traveling with a dog in a van

Can you spot Mr. French?

5. How to keep a tiny area clean when traveling with pets.

We keep our home as clean as it can be, which usually means vacuuming every single day. Our bigger dog sheds a ton, and we would be choking on hair all day if we didn’t vacuum as much.

We use a Dyson vacuum (this is the one that we love) and it works great. It’s small, rechargeable, and super portable.

We bring this with us whether we’re on the van or in the boat. Highly, highly recommend.

 

6. How to keep the temperature comfortable in an RV or boat for a pet.

For us, we try to follow good weather as much as we can. However, I know that is not always possible.

There are devices where you can track the temperature over a cell signal back to wherever your dog is (you can find a whole bunch of them on Amazon), which can be a great option. However, you might not always have a signal.

If we are unable to make the temperature comfortable for our dogs or if the electrical power isn’t stable, we simply do not leave our dogs alone.

But, it usually isn’t hard to make it comfortable for them. By opening windows, turning on fans, or the AC, you can make it pretty comfortable for both humans and pets.

 

What do I need to travel with my dog?

Walking in Utah

7. Full-time travel with dogs – how they use the bathroom on the boat.

This is one of the most common questions we’re asked about traveling with a dog. People are fascinated with how our dogs go to the bathroom on our boat.

We always try to make regular and frequent bathroom breaks for our dogs.

Whether we are traveling by boat or car, we like to keep bathroom breaks as similar as possible.

We were nervous training our older dogs to use the bathroom on the boat, but it has been just fine. They only have to do this when we’re on an overnight sail, so it’s not very often. Keep in mind that 90% of the time you’re living on a boat is either at anchor or in a marina, so there is almost always land access.

When we look for a marina or an anchorage, we are always looking to see if there is a good area to let out the dogs. That may mean a beach, a grassy area, a dinghy dock so that we can walk to town with the dogs, and so on.

A lot of people falsely assume that when you’re sailing full-time, neither you or your pets touch land for years at a time, and that assumption just makes me laugh. Our dogs go to shore multiple times a day, except for when we are doing a long passage (which isn’t often).

Depending on where we are, we may have to take them for a short dinghy ride to shore or we’re at dock and can simply walk them off the boat to use the bathroom.

If we are doing a longer passage on our sailboat and there is no land for them to step their paws on, we do have fake grass on our boat that they are able to use. It doesn’t happen often though, and most of the time they still get walked 3-5 times a day even when we are on our sailboat.

 

8. How to keep dogs safe on a boat.

The longest sail that we have done with our dogs was 9 days, and they did extremely well on that sail.

Some of the things we do to make sure they are happy and safe include:

  • One of us is pretty much always keeping an eye on them. If we can’t pay close attention to them, then we put a leash on them or close off the inside area so they cannot fall overboard. (If you decide to leash your dog, please make sure they cannot fall off the boat and choke themselves. This applies to being on the boat, dock, land, etc. Sadly we know someone who had this happen to their dog and it had a very sad ending.)
  • We have life jackets for each dog, and we’ve tested them before bringing them out for sails.
  • At night, we keep everything closed off so that there are absolutely no worries with the dogs.
  • We make sure there is plenty of water, food, snacks, and snuggles.

We are lucky that our dogs are quite comfortable on the boat.

They don’t panic or bark.

They simply fall asleep and are relaxed when on the boat.

I think this ties back into #1 of this blog post – we slowly introduce them to new things. This has allowed them to be quite adaptable to any environment that they are put in, whether we are tent camping, roadtripping, in an RV, or on an overnight sail.

 

Traveling with dog tips

Testing out their new dog life jackets 

9. The items that make it easy for traveling with a dog.

We have a lot of items on the boat that are specifically for our dogs, and many of them come with us when we move to our camper van. Here are the most helpful items we have:

  • Dog ramp – This is for when we are at a fixed dock, where it’s a long hop from our transom to the dock. We had a plastic one for a little bit but we found that it would bend in the heat so we had to switch to something better. We are much happier with an aluminum ramp now.
  • Dog toys – To keep our dogs busy and happy, I like to put peanut butter in a Kong and give it to them as a nice treat.
  • Dog waste bags – We keep a plethora of these onboard our boat and van. We usually bulk buy a big box of around 1,000 bags. We also make sure they are biodegradable and compostable.
  • Help ‘Em Up Harness – This is the harness we have for our bigger dog, and I highly recommend it. We put it on her so that she can easily get in and out of steeper places. It’s a little pricey, but well worth it to make sure your dog is safe.
  • K9 SportSack – We use this for our smaller dog so that we can easily just carry him around. He’s not a huge fan of walking everywhere so putting him in the backpack makes it easier on everyone.
  • Collapsible bowl – We always keep one of these in our hiking bag so that the dogs always have something easy to drink out of.
  • Life jacket – If your dog is going to be on a boat, you’ll want a life jacket for them.

 

10. Getting exercise is still important.

Some people think that having a dog on a boat or in an RV is bad for the dog. I don’t think that could be further from the truth, though.

Our dogs get 3-5 walks (sometimes more) each and every single day.

Exercise is so important whether you’re camping with a dog, sailing with them, etc. Don’t assume you’ll fit in walks – you have to plan them in advance.

We always make sure to give our dogs a long walk at the start of the day if we know we’re going to have a long drive or sail. This way, we can try to tire them out and get rid of a lot of energy.

Taking them for a walk is one of the first things we do when we stop, and then we always fit in another long walk before bedtime. You may feel exhausted after a long day of sailing or traveling, but don’t forget how important exercise and routines are to your pets.

 

11. Have a traveling checklist.

Before you leave for wherever you’re going, I recommend bringing anything you think you’ll need, even if you don’t end up using it. This may include:

  • Pet food
  • Water and food bowls
  • Collars, leashes, harnesses
  • Dog waste bags
  • Treats
  • Blankets and beds
  • Medication
  • Paperwork

Specific pets may need different items, and go over your list before you leave. 

12. What about traveling with a dog on a plane?

I would be careful if you are wanting to fly places with your pets where they have to go in the cargo area, as it can be traumatizing to put them in the cargo area of a plane. It can be extremely hot, scary, and they will be away from you for quite some time.

I know several people who have moved to a new country and flew their dogs in cargo in order to make it possible to bring their pets. But, nearly all of these people have told me that they would never do it again, unless absolutely necessary.

If you are going on short trips by plane, I would not recommend putting your pets in cargo for that. Instead, if you have to bring your pet, I would simply find another way to travel. Or, you can find someone to watch your pet.

If your pet can sit with you on the plane, then that’s a whole different story. They may be just fine on the plane, but you should consult with a veterinarian if you have any questions. We’ve avoided flying with our dogs, so I’m just not as familiar with it.

 

Traveling with a dog

We rented a pontoon in Nevada several years ago with the dogs

Traveling with a dog – in summary

I hope you found today’s article helpful.

Please remember that I am not a pet expert, nor a veterinarian. I do have a lot of experience traveling with a dog, but all pets are different. They have different needs and personalities, and what works for my dogs may not work for yours.

So if you have any concerns about traveling with your pet, please contact your veterinarian.

Traveling with a dog can be extremely enjoyable, but there are a few more things you’ll have to think about.

If you’re anything like me, though, it will be well worth it and your pet will enjoy it as well!

Do you like to travel with your dogs? What other questions do you have for me about traveling with pets?

Related Posts

<!–
–>

Source: makingsenseofcents.com

How Interest Rate Hikes Affect Personal Loan Investors – SmartAsset

How Interest Rate Hikes Affect Personal Loan Investors – SmartAsset

Tap on the profile icon to edit
your financial details.

In December 2015, the Federal Reserve raised the federal funds rate by a quarter of a percentage point. That was the first time the Fed had raised rates in nearly a decade. While federal funds rate changes don’t directly impact peer-to-peer (P2P) loan interest rates, lending platforms may begin increasing their rates. If you’re investing in peer-to-peer loans, it’s important to understand how that may impact your portfolio.

Rising Rates May Mean Better Returns

Personal loan investors make money by claiming a share of the interest that’s paid on the loans, in proportion to the amount that’s invested. If the platform you’re using raises rates for their borrowers, that means you’ll likely see higher returns.

That’s especially true if you’re open to funding high-risk loans. Peer-to-peer platforms assign each of their borrowers a credit risk rating, based on their credit scores and credit history. The loans that get the lowest ratings are assigned the highest rates. For example, Lending Club’s “G” grade loans (the loans that go to the riskiest borrowers) have interest rates of 25.72%.

Assuming borrowers don’t default on their payments, these investments can be more lucrative than lower-risk loans. Using Lending Club as an example again, F and G grade loans historically have had annual returns of 9.05%, which is nearly double the 5.22% return that investors earn from low-risk “A” grade loans.

The Downsides of a Rate Increase

While rising interest rates may put more money in investors’ pockets, there are some drawbacks to keep in mind. For one thing, it’s possible that as rates rise, borrowers could decide to explore other lending options. If that happens, there would be a smaller pool of loans for investors to choose from.

To compensate, peer-to-peer lenders may resort to issuing lower-quality loans as rates rise, but that could be problematic for investors who prefer to steer away from riskier borrowers. If the platform you use no longer offers the kinds of loan products you want to invest in, you’ll have to reallocate those assets elsewhere to keep your portfolio from becoming unbalanced.

Finally, rising interest rates could result in a higher default rate. Increased rates mean that borrowers have to pay a lot of money for taking out personal loans. If the personal loan payments become unmanageable, a borrower may end up defaulting on their loan altogether. Some platforms refund the fees that investors have paid, but they usually don’t refund their initial investments after borrowers default.

What Investors Ought to Consider

If you’re an active P2P investor or you’re thinking of adding P2P loans to your portfolio, you can’t afford to overlook the risk that’s involved. Financing the riskiest loans is a gamble, so it’s important to consider the consequences of putting money into those kinds of investments.

A good way to hedge your bets is to spread out your investments over a variety of loan grades. That way, if a high-risk borrower defaults you still have other loans to fall back on.

If you want more help with this decision and others relating to your financial health, you might want to consider hiring a financial advisor. Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with top financial advisors in your area in 5 minutes. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.

Photo credit: ©iStock.com/Ondine32, ©iStock.com/Tomwang112, ©iStock.com/xijian

Rebecca Lake Rebecca Lake is a retirement, investing and estate planning expert who has been writing about personal finance for a decade. Her expertise in the finance niche also extends to home buying, credit cards, banking and small business. She’s worked directly with several major financial and insurance brands, including Citibank, Discover and AIG and her writing has appeared online at U.S. News and World Report, CreditCards.com and Investopedia. Rebecca is a graduate of the University of South Carolina and she also attended Charleston Southern University as a graduate student. Originally from central Virginia, she now lives on the North Carolina coast along with her two children.
Read next article

Categories

Source: smartasset.com

5 Things to Consider Before Getting a Personal Loan

Consider This Before Getting a Personal Loan – SmartAsset

Tap on the profile icon to edit
your financial details.

It’s a new year and if one of your resolutions is to get out of debt, you might be thinking about consolidating your bills into a personal loan. With this kind of loan, you can streamline your payments and potentially get rid of your debt more quickly. If you plan on getting a personal loan in 2016, here are some key things to keep in mind before you start searching for a lender.

Check out our personal loan calculator.

1. Interest Rates Are Going Up

At the end of 2015, the Federal Reserve initiated a much anticipated hike in the federal funds rate. What this means for borrowers is that taking on debt is going to be more expensive going forward. That means that the personal loan rates you’re seeing now could be a lot higher six or nine months from now. If you’re planning on borrowing, it might be a good idea to scope out loan offers sooner rather than later.

2. Online Lenders Likely Have the Best Deals

The online lending marketplace has exploded in recent years. With an online lender, there are fewer overhead costs involved, which translates to fewer fees and lower rates for borrowers.

With a lower interest rate, more money will stay in your pocket in the long run. Lending Club, for example, claims that their customers have interest rates that are 33% lower, on average, after consolidating their debt or paying off credit cards using a personal loan.

Related Article: How to Get a Personal Loan

3. Your Credit Matters

Regardless of whether you go through a brick-and-mortar bank or an online lender, you  likely won’t have access to the best rates if you don’t have a great credit score. In the worst case scenario, you could be denied a personal loan altogether.

You can check your credit score for free. And each year, you have a chance to get a free credit report from Experian, Equifax and TransUnion. If you haven’t pulled yours in a while, now might be a good time to take a look.

As you review your report, it’s important to make sure that all of your account information is being reported properly. If you see a paid account that’s still showing a balance, for example, or a collection account you don’t recognize, you’ll need to dispute those items with the credit bureau that’s reporting the information.

4. Personal Loan Scams Are Common

As more and more lenders enter the personal loan arena, the opportunity for scammers to cash in on unsuspecting victims also increases. If you’re applying for a loan online, it’s best to be careful about who you give your personal information to.

Some of the signs that may indicate that a personal loan agreement is actually a scam include lenders who use overly pushy sales tactics to get you to commit or ask you to put up a deposit as a guarantee against the loan. If you come across a lender who doesn’t seem concerned about checking your credit or tells you they can give you a loan without doing any paperwork, those are big red flags that the lender may not be legit.

Related Article: How to Avoid Personal Loan Scams

5. Not Reading the Fine Print Could Cost You

Before you sign off on a personal loan, it’s best to take time to read over the details of the loan agreement. Something as simple as paying one date late could trigger a fee or cause a higher penalty rate to kick in, which would make the loan more expensive in the long run.

Photo credit: ©iStock.com/DragonImages, ©iStock.com/Vikram Raghuvanshi, ©iStock.com/MachineHeadz

Rebecca Lake Rebecca Lake is a retirement, investing and estate planning expert who has been writing about personal finance for a decade. Her expertise in the finance niche also extends to home buying, credit cards, banking and small business. She’s worked directly with several major financial and insurance brands, including Citibank, Discover and AIG and her writing has appeared online at U.S. News and World Report, CreditCards.com and Investopedia. Rebecca is a graduate of the University of South Carolina and she also attended Charleston Southern University as a graduate student. Originally from central Virginia, she now lives on the North Carolina coast along with her two children.
Read next article

Categories

Source: smartasset.com

What Is Quantitative Tightening?

What Is Quantitative Tightening? | SmartAsset.com

Tap on the profile icon to edit
your financial details.

In the past two years, investors have taken an unusual interest in the Federal Reserve Bank. That’s mostly due to a Fed policy known as ‘quantitative tightening’, or QT. Effectively, QT was the Fed’s attempt to reduce its holdings after it bought huge amounts of debt during the 2008 Great Recession. While some details will interest only economists, QT  may have implications for financial markets and regular investors. It’s useful to explore the backstory, but a financial advisor can be helpful if you’re concerned about how Fed activity can impact your investments,.

What is Quantitative Tightening?

To understand quantitative tightening, it’s helpful to define another term, which is quantitative easing. To do that, we need to go back to the bad days of 2008.

When the Great Recession hit, the Fed slashed interest rates to stimulate the economy. But it was evident that wasn’t nearly enough to stave off crisis. So the Fed provided another jolt of stimulus by buying Treasury bonds, mortgage-backed securities and other assets in huge volume. This combination of slashing interests rates massive government spending was qualitative easing, or QE, and fortunately it worked. Banks had more cash and could continue to lend, and more lending led to more spending. Slowly, the economy recovered.

But in the meantime, QE exploded the Fed’s balance sheet, which is a tally of the bank’s liabilities and assets. Prior to the crisis, the balance sheet totaled about $925 billion. With all the purchased debt, which the Fed categorized as assets, the balance sheet ballooned to $4.5 trillion by 2017. Years past the financial crisis and with a strong economy, the Fed decided to shrink its balance sheet by shedding some of its accumulated assets, effectively reversing QE.

That reversal is quantitative tightening. QE had poured money into the economy, and through quantitative tightening, the Fed planned to take some of that money out again. First it raised interest rates, which it had plummeted to zero during the financial crisis. Then, it began retiring some of the debt it held by paying off maturing bonds. Instead of  replacing these bonds with new debt purchases, the Fed stood pat and let its stockpile shrink. This effectively reduced the quantity of money under bank control, thus quantitative tightening.

Did Qualitative Tightening Officially End?

There was no official beginning or end to quantitative tightening. The Fed began to ‘normalize’ its balance sheet by raising interest rates in December 2015, the first hike in nearly a decade. In October 2017, it began to reduce its hoard of bonds by as much as $50 billion per month. But after four 2018 interest rate cuts and some stock market downturns, many observers worried the Fed aggressive normalization was too much of a shock to the economy.

In response, the Fed ended the interest rate hikes and slowed down on debt retirement. By March 2019, the cap on reductions reduced from $30 billion a month to $15 billion. By October 2019, the Fed announced it would once again start expanding its balance sheet by buying up to $60 billion in Treasury bills a month.

However, the Fed insisted this was not another round of quantitative easing. Some market observers reacted to that announcement with skepticism. But whether this was or wasn’t a new round of QE, the Fed’s action effectively stopped quantitative tightening.

How Quantitative Tightening Impacts Markets

Many investors worry that quantitative tightening would negatively impact markets. During the past decade, returns have shown a relatively high correlation with the Fed’s purchases. Conversely, the Fed’s selloff of assets was a contributing factor to the market dip in late 2018, which left the S&P 500 about 20% below its top price.

Quantitative tightening definitely made some investors nervous. That said, there are a few things to consider if the Fed shrinks the balance sheet in the future. First, it’s unlikely the balance sheet will contract to its pre-2008 level. The Fed hasn’t indicated where a ‘happy medium’ might be, but the balance sheet remained well about the pre-2008 figures when expansion began again in October 2019.

Additionally, it’s unlikely that quantitative tightening will reverse quantitative easing’s impact on long-term interest rates. In part, the Fed purchased long-term bonds and mortgage-backed securities to move money into other areas, like corporate bonds, and lower borrowing costs. Also, the Fed hoped this activity would encourage the productive use of capital. According to the Fed’s research, the use of quantitative easing reduced yields on 10-year treasury bonds by 50, to 100 basis points (bps).

While quantitative tightening may have reversed some of this impact, experts believe it will not undo long-term interest rates by 100 bps. Ultimately, it comes down to the comparative impact of the expansion and contraction of the balance sheet. In October 2019, the contraction was not nearly sufficient to reverse the expansion.

Other Considerations of Quantitative Tightening

Many investors worry that quantitative tightening will have a big impact on inflation and liquidity. This is because changes in inflation and liquidity may occur when there is a discrepancy concerning supply and demand. During the financial crisis, the Fed increased the money supply since the economic system desperately needed liquidity. A decade and strong recovery later, there’s less liquidly preference. In response, the Fed has decreased  cash reserves. In a strong market, this should have no real impact on liquidity and inflation.

The Takeaway

Quantitative tightening is a monetary policy that increased interest rates and reduced the money supply in circulation by retiring some of the Fed’s debt holdings. After qualitative easing expanded the money supply for several years to bring the economy back on track, the Fed used qualitative tightening as a means to normalize its balance sheet.

While quantitative tightening did not completely reverse quantitative easing, it did shrink the Fed’s balance sheet. This strategy left many investors uneasy about future returns and interest rates. That said, balance sheet normalization did not prove to be as disruptive as many investors feared.

Tips for Investors

  • The Fed’s monetary policy quickly becomes complex, but it’s still useful for investors to keep an eye on the bank’s actions. Since interest rate changes can have direct impact on major purchases and investment plans, understanding the Fed’s reasoning for these decisions can be helpful.
  • Financial advisors can help their clients cut through the noise and translate technical analysis of market observers into plain language. Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in five minutes. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.

Photo credit: ©iStock.com/drnadig, ©iStock.com/claffra, ©iStock.com/Duncan_Andison

Ashley Chorpenning Ashley Chorpenning is an experienced financial writer currently serving as an investment and insurance expert at SmartAsset. In addition to being a contributing writer at SmartAsset, she writes for solo entrepreneurs as well as for Fortune 500 companies. Ashley is a finance graduate of the University of Cincinnati. When she isn’t helping people understand their finances, you may find Ashley cage diving with great whites or on safari in South Africa.
Read next article

Categories

Source: smartasset.com

What Can a Landlord Deduct From Your Deposit? A Primer for Current and Former Renters

Maybe you didn’t think twice when you put a big security deposit on that fancy apartment two summers ago. But now that you’re getting ready to move again, you might be wondering how much of that deposit you’ll actually get back.

Believe it or not, your deposit isn’t at the mercy of your landlord. Tenants have rights, and landlords have limitations on what they can deduct from your deposit.

In Florida, for example, “if the landlord fails to return the security deposit in a timely manner, or deducts for normal wear and tear, then the tenant can sue the landlord to get their deposit back and the landlord will have to pay the tenant’s attorney fee,” says Larry Tolchinsky, a real estate lawyer and partner at Sackrin & Tolchinsky in Hallandale Beach, FL.

But to avoid getting to that point, it’s important for tenants to understand the basics on deposits. In most states, the timely return of your deposit means there’s a deadline—such as 30 days—so be sure to leave a forwarding address.

When landlords deduct from your deposit, they will typically include an itemized statement explaining how the deposit was applied. In California, for example, if a landlord deducts any more than $126, they must provide receipts for their deductions.

Landlords can’t deduct from your deposit for any old reason; there has to be a legit circumstance. The rules may vary from city to city (or state to state), so read up on what your landlord can and can’t do in your area. But, in general, here are some things landlords can deduct from your deposit.

Nonpayment of rent

Unemployment as a result of the COVID-19 pandemic has hit many tenants hard, rendering them unable to pay rent. Some landlords and management companies have offered rent relief, but others have claimed that unpaid rent is unpaid rent. In this situation, landlords can collect unpaid rent—and late fees—from your deposit as necessary.

“Rent that is not paid is considered damages when a tenant vacates,” says Eric Drenckhahn, a real estate investor and property manager, who runs the blog NoNonsenseLandlord.com. “A tenant cannot use the damage deposit to pay their rent without the landlord’s approval, but a landlord can deduct it for nonpayment after a tenant has left.”

Unpaid utilities

Forgetting to pay your utility bill happens. But if you pay for things like trash and water through your property management company, be aware that your landlord could tap your security deposit to cover any bills you missed.

Tolchinsky says there is no black and white law on this, but it is possible. It all depends on the terms of your lease and local rules governing the jurisdiction that you reside in.

Abnormal cleaning costs

If you left the place trashed and filthy, expect your landlord to dig into your deposit. Landlords can deduct from your deposit for excessive dirtiness, beyond normal cleaning costs.

Drenckhahn says the place should be “broom clean,” or as clean as when you moved in.

“Dirt and grease left behind is not wear and tear,” says Drenckhahn. “Examples of excessive dirtiness includes removing stains from the carpet, replacing the carpet due to a cat using a closet for a litter box, or replacing door trim due to cat scratches.”

Doing a little cleaning before leaving isn’t a bad idea, but it doesn’t guarantee it’ll save your security deposit.

Tolchinksy says if a tenant hires a professional cleaner, rents a steam cleaner, or buys paint to paint the walls, he or she “should maintain all invoices and receipts” to provide proof to the landlord.

Damage to the property

Security deposit laws allow a landlord to deduct from a security deposit for any damage. This is different from normal wear and tear, such as faded paint or worn carpet that is naturally occurring and not due to the tenant. Examples of damage to the property include a broken bathroom vanity, cracked kitchen countertop, or broken doors.

Tolchinsky says it’s a good idea for a tenant to request a move-in and a move-out checklist and document by pictures and video the condition of the apartment.

Items left behind

Packing and moving everything you own is a huge undertaking. But regardless of how exhausted you are, don’t leave any items behind; it could be a costly mistake.

“Mattresses and box springs left behind are expensive to get rid of, and you will be charged accordingly,” says Drenckhahn. “It is not unusual to be charged $50 or more for each piece.”

If you do need to get rid of a bunch of large items, hire a junk hauling company, try to sell them online, or look into donating them to charity.

Breaking the lease

In some circumstances, breaking your lease is the only option. But breaking your lease early makes it less likely that you will reunite with your deposit.

A landlord can keep all, or part, of your deposit to cover costs if you break your lease early, per landlord-tenant state laws and what’s written in your lease contract. If you can, try to move when your lease is up.

“In my places, you are required to be out by 10 a.m. There is no late checkout, as I have tenants generally moving in the next day,” says Drenckhahn. “When you have the place clean, and even move out a few days early, it’s very easy to refund 100% of the damage deposit.”

Source: realtor.com

Homebuying Must-Haves: How COVID-19 Has Changed What’s Hot or Not in a Home

The last two months of stay-at-home orders and quarantines have drastically changed how people are utilizing and enjoying their home. The needs of homeowners have changed and that has altered what home buyers are now looking for in a home. What used to be the “must-have” item or space in a home is changing as homes have become people’s offices, playrooms, restaurants, and classrooms. Here’s what you can expect to come back in style, and fade out, in a post-coronavirus market.

What’s In

The Rise in Home Offices

As both children and parents are now working from home, homeowners are discovering the necessity for dedicated home offices. While the new normal post-coronavirus remains to be seen, companies are already planning for employees to work remotely more often. The days of utilizing the dining table as a workspace are proving to not be functional or realistic for the new reality. With an estimated 56% of the US workforce employed in a remote work compatible field and an estimated 66% of employees currently working from home during the Coronavirus pandemic, it’s now a critical element for home buyers that a home has a dedicated home office or an area that could be utilized as one. As sellers list their homes this summer, they’d be wise to cater to this new need by staging a room or area as an office for home buyers to see the potential.

Comfortable workplace with computer near wooden wall in stylish room interior. Home office designComfortable workplace with computer near wooden wall in stylish room interior. Home office design

Taking the Living Room Outside

The yard and extended living areas have always been a factor in the home buyer’s mind. But as community swimming pools and playgrounds are shuttered due to the outbreak, the importance of ample backyard space or additional outdoor areas to enjoy and relax have risen in popularity. As quarantine grows, many are looking for ways to escape their four walls in a safe way. Since COVID-19 and food scarcity, many homeowners value the area to create their own garden. Buyers will be looking for existing gardens or spaces to create one.

A Need for Flexible Spaces

As homeowners utilize their homes in new ways, spaces that can serve double (or triple) duty has major appeal. A guest bedroom that also provides a home office area, or a bonus room that serves as a media room and an at-home classroom. Homeowners are getting creative with their spaces and needing their spaces to serve multiple purposes. For those selling in the coming months, staging to promote and define flexible spaces would appeal to home buyers!

What’s Out

Open Concept Floor Plans

Although it has been all-the-rage for the last several years, open concept makes it difficult for homeowners that are cooking, Zoom-learning, and conference calling more often. As many modern designs offer one large room that serves as the living room, dining room, and kitchen, its popularity has waned as families need more individual, quiet spaces to work and learn at home.

Stainless Steel

What has been the “gold” standard in kitchens for many years, in a post-COVID world, home buyers are looking for sanitary surfaces. If you’ve ever stepped back to look at your stainless steel dishwasher, you’ve probably seen its front cluttered with fingerprints and handprints. Having lived through Coronavirus, we know the detrimental power of transferring germs and viruses from touch. More sanitary surfaces such as copper will most likely grow in popularity with buyers. In fact, in a recent study published in the New England Journal of Medicine and funded by the National Institute of Health, researchers discovered that the novel coronavirus survived for only four hours on copper versus three days on stainless steel.

While the future “new normal” is still up in the air, the real estate market is still moving homes. As with other previous events, COVID-19 has forced a change in the needs of buyers—and those needs may continue to evolve as more of our day-to-day lives are changed because of the pandemic. But, buyers are already shifting their needs and wants which we can reasonably expect to have a long term effect on home design.


See more posts by this author

Jennifer is an accidental house flipper turned Realtor and real estate investor. She is the voice behind the blog, Bachelorette Pad Flip. Over five years, Jennifer paid off $70,000 in student loan debt through real estate investing. She’s passionate about the power of real estate. She’s also passionate about southern cooking, good architecture, and thrift store treasure hunting. She calls Northwest Arkansas home with her cat Smokey, but she has a deep love affair with South Florida.

Source: homes.com

What Is Financial Planning and Analysis (FP&A)?

What Is Financial Planning and Analysis (FP&A)?

Tap on the profile icon to edit
your financial details.

Financial planning and analysis (FP&A) is the process businesses use to prepare budgets, generate forecasts, analyze profitability and otherwise inform senior management decisions of how to implement the company’s strategy most effectively and efficiently. The FP&A functions can be accomplished by an individual or a team working alongside other finance professionals such as the controller and treasurer and reporting to the chief financial officer (CFO). While FP&A is often performed by people with an accounting background, it differs from accounting by focusing primarily on forward-looking information as opposed to historical data.

Typical members of an FP&A team include financial analysts and one or more FP&A managers charged with coordinating the work of the analysts. In larger organizations, a director or vice president of FP&A oversees the overall process and strategic direction and communicates with the CFO, CEO and members of the board of directors.

FP&A Functions

To fulfill its function of providing information and insight connecting corporate strategy and execution, FP&A performs a wide range of activities. These can be divided into a few broad categories including planning and budgeting, forecasting and management reporting.

The central output of the FP&A process consists of long- and short-term plans. The job requires using financial and operational data gathered from throughout the company. A key part of the FP&A process is collecting and combining a wide variety of figures from operations, sales, marketing and accounting departments to produce a unified view of the entire business that can guide strategy decisions by senior executives and board members.

Producing budgets is a big part of the FP&A planning function. Budgets describe expectations for the timing and amounts of arriving income, cash generation, disbursements to pay bills and debt reductions. Budgets may be monthly, quarterly and annually. Often FP&A creates a rolling budget for the following 12-month period that will be reviewed, adjusted and extended at the end of each quarter. FP&A also creates income statements and cash flow statements.

One of the performance reporting functions of FP&A is identifying variances when actual numbers reported by business units don’t match up to the budgeted amounts. In addition to identifying and quantifying variances, FP&A can offer recommendations for strategies that could be used to bring actual results in line with expectations.

Reports and forecasts from FP&A may be presented to the board of directors, to the CEO or other senior executives or to outside stakeholders such as lenders and investors. At a strategic level, decision makers use these analyses to choose how best to allocate the company’s resources.

Public companies reply on FP&A to provide shareholders and analysts with guidance on revenue and profits for upcoming quarters and fiscal years. The accuracy of the guidance supplied to the markets can have a sizable effect on stock prices.

Decision Support

Along with the ongoing responsibility to produce budgets, plans and forecasts, FP&A may also be called upon to support specific management decisions. For instance, it might analyze a merger or acquisition proposal to enable management to decide whether to pursue it or not. Other special projects delegated to FP&A could include analyzing internal incompatibilities and bottlenecks and making recommendations about how to improve the company’s processes.

Initiatives to find ways to trim costs and make a business more efficient are also likely to involve input from FP&A specialists. Because it is in constant communication with all areas of the company in order to gather data for its budgets and plans, FP&A is well suited to optimization efforts.

FP&A’s responsibilities could extend to nearly any department in the company, from operations to marketing to finance. For instance, FP&A may conduct internal audits, research markets or evaluate individual customer profitability. FP&A could also be called upon to provide risk management insights or assess the financial impact of tax policy decisions.

Bottom Line

Financial planning and analysis involves gathering financial and other data from throughout a business’s various departments and using that to generate projections, forecasts and reports to help executives make optimum business decisions. Annual and quarterly budgets and forecasts, profit-and-loss statements, cash flow projections and similar decision-making tools are all produced by FP&A.

Tips for Small Business Owners

  • Financial planning and analysis is a job best handled by an experienced financial advisor. Finding the right financial advisor who fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in five minutes. If you’re ready to be matched with local advisors who will help you achieve your financial goals, get started now.
  • The 80/20 Rule can help businesses gain insight into issues and opportunities so they can respond more effectively and efficiently. By identifying elements contributing most to a given outcome, businesses can better target resources to remove obstacles and exploit openings.

Photo credit: ©iStock.com/kali9, ©iStock.com/Maica, ©iStock.com/Korrawin

Mark Henricks Mark Henricks has reported on personal finance, investing, retirement, entrepreneurship and other topics for more than 30 years. His freelance byline has appeared on CNBC.com and in The Wall Street Journal, The New York Times, The Washington Post, Kiplinger’s Personal Finance and other leading publications. Mark has written books including, “Not Just A Living: The Complete Guide to Creating a Business That Gives You A Life.” His favorite reporting is the kind that helps ordinary people increase their personal wealth and life satisfaction. A graduate of the University of Texas journalism program, he lives in Austin, Texas. In his spare time he enjoys reading, volunteering, performing in an acoustic music duo, whitewater kayaking, wilderness backpacking and competing in triathlons.
Read next article

Categories

Source: smartasset.com

S Corp vs. LLC: Which Is Best for Your Business?

S Corp vs. LLC: Which Is Best for Your Business? – SmartAsset

Tap on the profile icon to edit
your financial details.

So you own a business and you’re looking to incorporate. Two of the most popular business structure are the S Corp and the LLC. Which is best for your business can depend on many factors, such as what you do for a living, your tax situation and more. We’ll walk through the key characteristics of the two, and how to decide between them.

Why Incorporation Is Important

In most cases, the best reason to incorporate is liability. When you create a corporation, you separate your personal assets from your company’s assets. If someone wants to collect a debt or, at worst, file a lawsuit, they can only do so against the company and any assets in that company’s name. In turn, your personal savings remain protected. Both LLCs and S corporations can effectively protect your home life from a downturn in your professional world.

What Is An LLC?

A limited liability company, or LLC, is a type of corporate entity. It’s one of the most basic business types, and chiefly serves to separate the assets of the business owner(s) from the business itself.

If you opt to create an LLC, you will have created an entity that exists entirely separate from yourself. Clients will do business with this entity, which will have its own assets, debts and liabilities. If someone collects a debt or sues the LLC, they cannot pass that debt on to you.

What Is An S Corporation?

An S corporation is a tax status that allows a company to pass all profits directly through to its owner(s). This allows a small business to distribute profit-based income without double taxation.

Under the standard corporate form, known as a C corporation, a company first pays its corporate income tax. It then pays its owners and workers, who in turn pay personal income tax on that salary. This works well when a company functions entirely separately from the people who own and operate it.

However, in many small businesses, owners will take the profits entirely as their personal income. This creates a problem of double taxation, because in this case a business owner’s corporate income tax and personal income tax are one and the same. An S corporation allows the company’s owners to pay taxes only once via their personal income tax forms.

S Corp vs. LLC: Similarities and Differences

It is important to note that, because one is a corporate form and the other a tax status, LLCs and S corporations can, and do, overlap. To be clear, an LLC can file for S corporation tax status. Conversely, if you have S corporation tax status, you can also incorporate as an LLC. These forms do share a number of similar features, though, including:

  • Asset Protection – Both S corps and LLCs protect your personal assets from debt, bankruptcy, legal liability and other possible losses incurred by the corporation.
  • Double Taxation – All corporate profits pass along to the owners of LLCs and S corps without incurring corporate income taxes. This helps you avoid being taxed twice.
  • Multiple Members – LLCs and S corps can each have anywhere from one to multiple members, though an S corporation caps out at 100 shareholders. Further, only U.S. citizens and legal residents can be members of an S corporation.

In practice, one of the largest differences between LLCs and S corporations lies in how they assign payment. Under a default LLC operating as a sole proprietorship/general partnership, profits and expenses pass entirely through to the taxes of the individuals involved. Each participant both deducts business expenses and claims all profits on their personal income taxes. The LLC itself does not have any tax filings.

Under an S corporation, the members assign themselves a salary that the company pays out of its operating budget. This income must be reasonable for their position and industry. Then, after the company pays all expenses, it passes along any additional profits as a distribution to its members.

Here’s an example that illustrates these differences. Sue is a freelance programmer. She currently has an LLC that she operates. Last year she made $100,000 in income and had $10,000 in business expenses. Here’s how her tax situation plays out under the two statuses:

  • Sole Proprietorship LLC – Sue would claim $100,000 of personal income on her income taxes. She would reduce her taxable income by the $10,000 in expenses she incurred, leaving her with $90,000 in taxable personal income.
  • S corporation LLC – Sue has determined that a reasonable salary is $75,000. She would report that $75,000 as earned income. Her corporation would then pay the $10,000 in expenses and pass the remaining $15,000 as a profit distribution to Sue, who would report and pay taxes on it as corporate profit income.

Operating requirements for a multi-member S corporation are also significantly more complex than they are for an LLC. An S corporation must adopt bylaws which meet IRS guidelines and must have a corporate governing body that includes a board of directors and officers.

How Taxes Affect S Corps and LLCs

Most Americans pay a FICA tax of 7.65% of their income under $132,900, encompassing contributions to both Social Security and Medicare. Their employer pays the same 7.65% on their behalf. The self-employed, however, pay both sides of this tax, creating what’s known as the “self-employment tax.” This combines the aforementioned rates to the tune of a 15.3% tax on all self-employment income beneath the $132,900 limit.

The self-employment tax applies to all pass-through income as well. It does not apply to corporate profit distributions, though. The profit distributions will likely be taxed as ordinary income, while you may be able to classify them at the lower dividend income rate. In the end, you will not pay any payroll taxes on them.

S corporation members do not pay self-employment taxes on their profit distributions either. As a result, these members usually try to minimize the income portion of their earnings in favor of profit distributions. This is entirely valid as long as your income remains within a reasonable range. If you attempt to reduce your income too much, you will likely trigger an audit.

Continuing our previous example, Sue’s LLC earned $100,000 and spent $10,000 in business expenses last year. Under the S corporation form, Sue would save herself more than $2,000 in payroll taxes. Here’s how things would shake out:

  • Sole Proprietorship – Sue will claim the $100,000 of income and the $10,000 of expenses herself. This will lead to her having $90,000 of taxable income. She will pay the 15.3% self-employment tax on all of it, leading to $13,770 in self-employment taxes.
  • S Corporation – Sue takes a salary of $75,000. Her LLC will pay $10,000 in expenses and send her $15,000 as a corporate profit distribution. Sue and her LLC will pay the full combined 15.3% tax on her salary earnings, coming to $11,475. She will pay no payroll taxes on her profit distribution.

Bottom Line

In most cases, if you do business as an individual or a partnership, you should consider forming an LLC. This corporate form is inexpensive and highly flexible. Unless you anticipate major growth involving external shareholders and outside investment in the future, an LLC is a good way to protect your personal assets.

For an individual operator, the choice to elect S corporation tax status is largely a matter of accounting. If you would save a meaningful amount of money in self-employment taxes, it is likely worth electing S corporation status.

For a partnership, consider the operating requirements of an S corporation carefully. Would it significantly affect your business to adhere to bylaws and corporate governance? Do you have few enough members, and will you likely keep that membership group small? If so, once again, consider whether an S corporation would create enough tax savings to justify the costs of filing and paperwork.

Tips for Managing Your Finances

  • In-depth budgeting is a worthwhile strategy to adopt if you’re looking to improve your long-term finances. It may, however, be difficult to build a budget if you have little to no experience doing so. To get some help, stop by SmartAsset’s budget calculator.
  • Many financial advisors specialize in financial and tax planning for business owners. You can find a financial advisor today using SmartAsset’s financial advisor matching tool. Simply fill out our short questionnaire and you’ll be matched with up to three fiduciary advisors in your area.

Photo credit: ©iStock.com/andresr, ©iStock.com/PattanaphongKhuankaew,©iStock.com/alfexe

Eric Reed Eric Reed is a freelance journalist who specializes in economics, policy and global issues, with substantial coverage of finance and personal finance. He has contributed to outlets including The Street, CNBC, Glassdoor and Consumer Reports. Eric’s work focuses on the human impact of abstract issues, emphasizing analytical journalism that helps readers more fully understand their world and their money. He has reported from more than a dozen countries, with datelines that include Sao Paolo, Brazil; Phnom Penh, Cambodia; and Athens, Greece. A former attorney, before becoming a journalist Eric worked in securities litigation and white collar criminal defense with a pro bono specialty in human trafficking issues. He graduated from the University of Michigan Law School and can be found any given Saturday in the fall cheering on his Wolverines.
Read next article

Categories

Source: smartasset.com

Current Mortgage Rates Continue to Move Lower

It’s been good news this week for home buyers and home owners looking to refinance as mortgage rates have improved. It hasn’t been a big swing lower but mortgage rates have mostly remained lower after a drop on Monday morning. Read on for more details.

Where are mortgage rates going?                                             

Mortgage rates move lower in the Freddie Mac PMMS

Current mortgage rates have moved lower for second straight week, according to the Freddie Mac Primary Mortgage Market Survey (PMMS).

Here are the numbers:

  • The average rate on a 30-year fixed rate mortgage moved lower by two basis points to 4.51% (0.5 points)
  • The average rate on a 15-year fixed rate mortgage ticked lower by three basis points to 3.98% (0.5 points)
  • The average rate on a 5-year adjustable rate mortgage fell by five basis points to 3.82% (0.03 points)

Here is what Freddie Mac’s Economic & Housing Research Group had to say about rates this week:

“Mortgage rates inched backward this week to their lowest level since mid-April.

Backed by very strong consumer spending, the economy is red-hot this month, which is in turn rippling through the financial markets and driving equities higher.

Unfortunately, the same cannot be said about the housing market, where it appears sales activity crested in late 2017. Existing-home sales have now stepped back annually for the fifth straight month, and purchase mortgage applications this week were barely above year ago levels.

It is clear affordability constraints have cooled the housing market, especially in expensive coastal markets. Many metro areas desperately need more new and existing affordable inventory to break out of this slump.”

Rate/Float Recommendation                                  

Lock now before move even higher     

While mortgage rates have improved for the second consecutive week, the long-term outlook continues to be for them to gradually increase as the Federal Reserve gets ready for and follows through with increases to the nation’s benchmark interest rate. The first hike is expected to take place next month, with another likely in December.

Learn what you can do to get the best interest rate possible.  

Today’s economic data:           

Jobless Claims

Applications filed for U.S. unemployment benefits for the week of 8/18 came in at 210,000. That’s 2,000 lower than the previous reading, bringing the 4-week moving average down to 213,750.

FHFA House Price Index

The FHFA House Price Index increased 0.2% from the previous month in June. That brings the year over year increase to 6.5%.

PMI Composite Flash

The PMI Composite index hit a 55.0 in August. Manufacturing came in at 54.5 while Services hit 55.2.

New Home Sales

New Home Sales for July came in at an annualized rate of 627,000. That’s slightly below the consensus reading of 649,000.

Jackson Hole Symposium

Kicks off today and ends tomorrow.

Kansas City Fed Mfg Index 

11:00am

Notable events this week:     

Monday:   

Tuesday:   

Wednesday:         

  • Existing Home Sales
  • EIA Petroleum Status Report
  • FOMC Minutes

Thursday:     

  • Jobless Claims
  • FHFA House Price Index
  • PMI Composite Flash
  • New Home Sales
  • Jackson Hole Symposium
  • Kansas City Fed Mfg Index

Friday:          

  • Fedspeak
  • Jackson Hole Symposium

*Terms and conditions apply.

Carter Wessman

Carter Wessman is originally from the charming town of Norfolk, Massachusetts. When he isn’t busy writing about mortgage related topics, you can find him playing table tennis, or jamming on his bass guitar.

Source: totalmortgage.com

A Guide to Subsidized and Unsubsidized Loans

A Guide to Subsidized and Unsubsidized Loans – SmartAsset

Tap on the profile icon to edit
your financial details.

As you explore funding options for higher education, you’ll come across many different ways to pay for school. You can try your hand at scholarships and grants, but you may also need to secure federal student loans. Depending on your financial situation, you may qualify for a subsidized loan or an unsubsidized loan. Here’s the breakdown of subsidized and unsubsidized loans, along with how to get each of them.

Subsidized vs. Unsubsidized Loans

In name, there’s only a two-letter difference. But in operation, subsidized and unsubsidized loans  – sometimes referred to as Stafford loans – aren’t quite the same.

A subsidized loan is available to undergraduate students who prove financial need and are enrolled in school at least part-time. After students or parents of the students fill out the Free Application for Financial Student Aid (FAFSA), the school will determine how much money can be borrowed. Unfortunately, you can’t borrow more than you need.

One major difference of a subsidized loan vs. an unsubsidized loan is that the U.S. Department of Education pays the interest on a subsidized loan while the student is in school, for the first six months after graduating and during a deferment period (if the student chooses to defer the loan). For example, if your subsidized loan is $5,000 at the start of your college education, it’ll still be $5,000 when you begin paying it off after graduation because the government paid the interest on it while you were in school. The same may not be true for an unsubsidized loan.

An unsubsidized loan is available to both undergraduate and graduate students, and isn’t based on financial need. This means anyone who applies for one can get it. Like subsidized loans, students or their parents are required to fill out the FAFSA in order to determine how much can be borrowed. However, unlike subsidized loans, the size of the unsubsidized loan isn’t strictly based on financial need, so more money can be borrowed.

For an unsubsidized loan, students are responsible for paying the interest while in school, regardless of enrollment, as well as during deferment or forbearance periods. If you choose not to pay your interest during these times, the interest will continue to accrue, which means that your monthly payments could be more costly when you’re ready to pay them.

Both types of loans have interest rates that are set by the government and both come with a fee. Each one offers some of the easiest repayment options compared to private student loans, too. Students are eligible to borrow these loans for 150% of the length of the educational program they’re enrolled in. For example, if you attend a four-year university, you can borrow these loans for up to six years.

Pros and Cons

Both types of loans have pros and cons. Depending on your financial situation and education, one may be a better fit than the other. Even if you qualify for a subsidized loan, it’s important to understand what that means for your situation before borrowing that money.

Pros of Subsidized Loans

  • The student is not required to pay interest on the loan until after the six-month grace period after graduation.
  • The loan may be great for students who can’t afford the tuition and don’t have enough money from grants or scholarships to afford college costs.

Cons of Subsidized Loans

  • Students are limited in how much they can borrow. In the first year, you’re only allowed to borrow $3,500 in subsidized loans. After that, you can only borrow $4,500 the second year and $5,500 for years three and four. The total aggregate loan amount is limited to $23,000. This might cause you to take out additional loans to cover other costs.
  • Subsidized loans are only available for undergraduate students. Graduate students – even those who show financial need – don’t qualify.

If you don’t qualify for a subsidized loan, you may still be eligible for an unsubsidized loan.

Pros of Unsubsidized Loans

  • They are available to both undergraduate and graduate students who need to borrow money for school.
  • The amount you can borrow isn’t based on financial need.
  • Students are able to borrow more money than subsidized loans. The total aggregate loan amount is limited to $31,000 for undergraduate students considered dependents and whose parents don’t qualify for direct PLUS loans. Undergraduate independent students may be allowed to borrow up to $57,500, while graduate students may be allowed to borrow up to $138,500.

Cons of Unsubsidized Loans

  • Interest adds up — and you could be on the hook for it — while you’re in school. Once you start paying back the unsubsidized loan, payments may be more expensive than those for a subsidized loan because of the accrued interest.

How to Secure Subsidized and Unsubsidized Loans

If you’re looking to get loans to pay for a college education, direct subsidized or unsubsidized loans might be your best option.

To apply for a subsidized or unsubsidized loan, you’ll need to complete the FAFSA. The form will ask you for important financial information based on your family’s income. From there, your college or university will use your FAFSA to determine the amount of student aid for which you’re eligible. Be mindful of the FAFSA deadline, as well additional deadlines set by your state for applying for state and institutional financial aid.

After the amount is decided, you’ll receive a financial aid package that details your expected family contribution and how much financial help you’ll get from the government. Your letter will include the amount of money you’ll receive in grants, as well as all types of loans you could secure. If you’re ready to accept the federal aid offered, you’ll need to submit a Mastery Promissory Note (MPN). This is a legal document that states your promise to pay back your loans in full, including any fees and accrued interest, to the U.S. Department of Education. 

The Bottom Line

Both subsidized and unsubsidized loans may be good financial resources for upcoming college students who need help paying for school. Both loans tend to have lower interest rates than private student loans, as well as easier repayment terms. 

Keep in mind that these are still loans and they will need to be paid back. If you avoid paying your student loans, you could end up in default or with a delinquent status, and your credit score could be damaged. Once you’re done with your college or graduate school education, stay responsible with your student loan repayment and you’ll be on the path to a successful financial future.

Tips for Managing Student Loan Debt

  • If you’re struggling to manage student loan debt, consider working with a financial advisor. Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in five minutes. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.
  • Paying off student loans can be overwhelming. One way to make it easier is by refinancing them into one lower monthly payment, if you can. Check out the different student loan refinance rates that are available to you now.

Photo credit: ©iStock.com/baona, ©iStock.com/urbazon, ©iStock.com/designer491

Dori Zinn Dori Zinn has been covering personal finance for nearly a decade. Her writing has appeared in Wirecutter, Quartz, Bankrate, Credit Karma, Huffington Post and other publications. She previously worked as a staff writer at Student Loan Hero. Zinn is a past president of the Florida chapter of the Society of Professional Journalists and won the national organization’s “Chapter of the Year” award two years in a row while she was head of the chapter. She graduated with a bachelor’s degree from Florida Atlantic University and currently lives in South Florida.
Read next article

Categories

Source: smartasset.com