Should You Wait Until 2024 to Sign Your Next Personal Loan?

Certificate of deposit (CD) accounts have become far more popular over the past couple years, and it’s easy to see why. As the Federal Reserve has hiked the benchmark federal funds rate in an effort to combat inflation, CD yields have risen sharply. It is now possible to get a 1-year or 2-year CD with a yield significantly greater than 5% — a solid return for a risk-free investment.However, with many people adding CDs to their saving and investing strategies for the first time, it’s important to know what it could mean for your tax bill.Is CD interest taxable?The short answer is yes. Interest you earn from a CD, is considered “interest income” in the eyes of the IRS, and is therefore subject to federal income tax.Not only that, but interest income is taxed as ordinary income. While capital gains and qualified dividend income is taxed at preferential rates in most cases, interest income is taxed according to your marginal tax rate.One important point is that CD interest is taxable in the year it was paid even if you leave it in the account. It doesn’t necessarily need to be paid directly to you, or even be available for withdrawal without penalty. In other words, if you have a 5-year CD, you’ll have to report the interest you earn every year.CD interest tax reporting requirementsTechnically, you are supposed to report every dollar of taxable income to the IRS. But for practical purposes, the IRS sets minimum thresholds of income that banks, employers, and other entities are required to report.In most cases, if you have earned more than $10 in interest during a single year, the bank or credit union that paid the interest is required to send you a tax document known as a 1099-INT statement. And all taxpayers should know is that if you receive a tax document, it’s a safe assumption that the IRS received a copy as well and knows about the income.Even if your bank doesn’t send you a 1099-INT, or you simply don’t receive one in the mail for one reason or another, you’re required to report interest income of $10 or more. This is a fairly low threshold, and it means that if you owned a CD with at least a few hundred dollars in it during 2023, there’s a strong probability you’ll have reportable interest income.Can you avoid paying tax on your CD interest?There are some situations where you might be able to reduce your tax bill, or even avoid taxes on your CD interest entirely. As one example, if you pay an early withdrawal penalty for taking money from a CD early, it can be deducted from your taxable income, even if it exceeds the interest income you earned.Another way to avoid taxes on CD interest is to use a tax-advantaged retirement account, such as a traditional or Roth IRA. Many banks allow customers to open an IRA, and many of the top online brokerages offer a selection of CDs issued by several different banks. For the 2023 tax year, you can contribute as much as $6,500 to IRAs, or $7,500 if you are 50 or older, and you might even be able to deduct the amount of money you put into the account and avoid taxes on interest income. Keep these tips in mind if you’re hoping to lower your tax bill for the CDs you own. 

I flew business class for the first time a little over five years ago, on an eight-hour flight back to the United States. While I had flown first class on domestic flights before, this was a whole new level of travel for me. A seat that turned into a bed? I was hooked. My immediate reaction was “This is how I always want to fly.”And that’s what I’ve done. Travel is one of the things I don’t mind spending money on, so flying in business class is worth it to me. I’ve also used quite a few travel credit cards to cover the cost of some of that airfare in miles instead of cash.There’s a lot to like about flying business class. The seats are definitely much more comfortable, especially when they’re lie-flat seats. The meals can be pretty impressive, at least for something served on an airplane. Most people would probably assume there aren’t any real downsides, besides the higher cost.It’s mostly as good as advertised. But when you always fly business class, there is a potential downside that doesn’t get talked about much.Your travel standards go way, way upA single flight in business class might not change the way you look at travel. It’s nice, but you may consider it a one-time thing, or a way to treat yourself on special occasions.On the other hand, if you always fly in business class, then it’s almost certainly going to raise your travel standards. You get used to that level of service and luxury. Now, this isn’t necessarily a bad thing, but it does have consequences.For one, it becomes normal for you. It’s hard to go back to flying economy once you’ve gotten used to the perks of business class. And even business class loses some of its magic. Don’t get me wrong, I still love it. But it doesn’t wow me nearly as much as it did the first couple of times. At this point, I know the drill.It doesn’t just raise your standards for air travel, either. It will probably raise them across the board. When you always treat yourself to a nice flight, you may feel like you should do the same with your accommodations. No more hostels, questionable Airbnbs, or budget hotels. If you’re going to get to your destination in style, shouldn’t you stay in a nice hotel, too?There’s a good chance you’ll start expecting more from your travels. To get more, you usually need to pay more. Between airfare and hotels, you could end up spending much more than you used to.Embrace the change — or don’tTo reiterate, there’s nothing wrong with having high standards when you travel. Many people go from budget travel as young adults to more expensive trips as they get older. If you want to fly business class for every trip and stay in premium hotels, you shouldn’t feel bad about it. Everyone has their priorities with how they spend their money.You should, however, be ready for the costs involved. It’s not worth going into debt just so you can travel in luxury. Here are a few ways to finance those business-class flights, fancy hotel stays, and meals at Michelin star restaurants.Set up a travel fund and contribute to it every month. Open a high-yield savings account to serve as your travel fund. If you already have a savings account, you can also set up a sub-savings account specifically for travel. Then, decide how much you’ll transfer to it every month.Cut back on other expenses so you have more money to spend on travel. If travel is a priority for you, that may mean spending less on other, less important expenses. For example, I haven’t had a car for years because I can get around fine without one. Instead of an expensive car payment, I’d rather have more money I can spend on vacations. Part of improving your personal finances is deciding where you can spend and get the most out of your money.Get a travel credit card and use it to pay for all your purchases. Travel cards earn rewards that you can use to cover travel expenses. If you love to travel, it makes sense to have one of these credit cards. You can use it to pay for your regular expenses, and then use the rewards you earn to save on your travel costs.You may also discover that you’re fine with any type of trip. Some travelers don’t care about all the bells and whistles. There’s no right or wrong way to travel. Just know that if you start making higher-end travel a regular part of your life, it can be hard to go back.

By: Christy Bieber |
Updated
Nov. 9, 2023– First published on Nov. 9, 2023

With grocery prices through the roof, your credit cards have probably been getting a workout. But you can do your bank account a favor by stocking up on some Costco frozen food items. Here are some top picks that deserve a place in your freezer. These items are delicious and can form the basis for quick, affordable meals on nights you don’t really feel like cooking. They’re so good, that they could even prompt you to stay home instead of eating out, thus sparing you a restaurant bill. 1. Just Bare Lightly Breaded Chicken Breast ChunksYou can score four pounds of frozen chicken breast chunks for just $20.19 delivered (and even less in store) if you pick up the Just Bare Lightly Breaded Chicken Breast Chunks from Costco. These delightful chicken treats come in a resealable bag and are fully cooked, so it’s just a simple matter of reheating them to get dinner on the plate. There are no antibiotics, no added hormones, and no steroids to worry about, and Costco’s price on them is below what many competitors charge, even if you’re paying the higher online price and having them delivered.The breast chunks are a great alternative to chicken nuggets for your kids (or for you), but adults will love them as well. Serve them by themselves or in a salad for a simple and delicious meal. 2. Flav-R-Pac Cut Green BeansPriced at just $8.09 for a five-pound bag, this Flav-R-Pac of cut green beans gives you the perfect base for a side dish or can be used as a yummy salad topper. Just $1.62 per pound is a great price for a healthy and nutritious product, and you can serve them along with Costco’s famous rotisserie chicken to have a complete meal on the cheap that actually has some health benefits as a bonus. 3. Kirkland Signature Ground Beef PattiesA classic hamburger is a great lunch or dinner, especially if you can just toss it on the grill or in a frying pan and have it ready within minutes. Whether you’re camping, tailgating, throwing a BBQ, or just want a fast and meaty meal at home, the Kirkland Signature Ground Beef patties waiting in your freezer will be there for you. The online price-per-pound with delivery is only $5.10 and costs are lower in store, so these are a pretty good deal compared to what competitors charge for similar products. They’re also best if cooked directly from frozen so you don’t even have to plan ahead. 4. Otis Spunkmeyer Chocolate Chunk Cookie Dough, 6 lbsThis product is six pounds of cookie dough for $16.99 delivered. I shouldn’t even have to say anything more to convince you to buy it. But just in case you aren’t clearing freezer space right now, consider the fact that the cookie dough chunks are pre-portioned and don’t have to be thawed before baking. So you can just grab a few out of the freezer whenever you feel the urge for a cookie, bake them, and they’ll be ready in minutes. Each of these Costco items is a great buy, and a delicious treat that you’ll want to have ready and waiting in case you need a meal or snack. Pick them up on your next Costco trip so you’ll have food at home the next time your kids (or you) are tempted to splurge on a restaurant meal just because you don’t feel like making something from scratch. Your wallet will thank you. 

By: Lyle Daly |
Updated
Nov. 10, 2023– First published on Nov. 10, 2023

Millionaires aren’t as rare or as different as some people think. About 2% of U.S. adults are millionaires, according to research by Henley & Partners. Becoming a millionaire isn’t easy, but it’s a realistic goal if you manage your money well.What sets millionaires and future millionaires apart isn’t their job or their salary. It’s their mindset about money. There are a few key differences between the way millionaires think about money and how much of the world does. By learning how to think like a millionaire, you’ll be able to improve your personal finances and build lasting wealth.1. Focus on the long-term impact of financial decisionsMillionaires are good at taking a big-picture view of their finances. They zoom out and look at how a decision will affect them five, 10, and 20 years down the road, not just in the moment. That’s one of the reasons they don’t fall into the trap of instant gratification.For a straightforward example, if there’s $1,000 left each month after paying bills, lots of people would be tempted to spend it. That might make you feel good in the present, but it does nothing for you in the future.Let’s say you invested your extra $1,000 per month, instead. The average stock market return is about 10% per year. At that return, after 30 years of investing, you’d have $1.97 million. Of that total, only $360,000 would be money you contributed. The rest is your return on investment (ROI).2. Look for ways to increase your earning potentialYou don’t need a massive salary to build wealth, but it doesn’t hurt, either. Americans with larger incomes have higher net worths, on average. For example, those in the middle of the pack (in the 40th to 60th income percentiles) have a median net worth of $169,420, according to the 2022 Survey of Consumer Finances. Those in the top 10% of incomes have a median net worth of $2.65 million.By raising your income, you have more money to save and invest. One of the ways millionaires do this is by developing multiple sources of income. In a study on self-made millionaires, Thomas Corley found that 65% had at least three sources of income before making their first $1 million.If you’re interested in building more income streams, consider setting up your own freelance business. If not, having one source of income is fine, too. Make the most of it by looking for opportunities to increase it, whether that’s by getting a promotion or switching jobs.3. Have a detailed plan for your financesMillionaires tend to be planners. In Northwestern Mutual’s 2023 Planning & Progress Study, 77% of the millionaires surveyed described themselves as disciplined or highly disciplined planners.For financial planning, it helps to set short- and long-term goals for yourself. For example, you could set a monthly goal to save 10% of your income and invest another 10%. Your yearly goal could be to add $5,000 in savings to your emergency fund and $5,000 to your retirement accounts. Concrete goals like these give you a target to aim for, which works much better than just saving whatever you can every month.4. Invest in yourselfInvesting in yourself refers to spending your time and/or money to improve your knowledge and skills. A common example is getting a college degree. It costs money to go to college, but a college education makes you more knowledgeable and can also help with landing higher-paying jobs.Wealthy people understand the importance of investing in themselves. A study by Ramsey Solutions found that a staggering 88% of millionaires graduated from college. Keep in mind that there are also plenty of other ways to invest in yourself, such as taking courses online. Another form of self-investment that many millionaires practice is reading every day to build knowledge.5. Understand that building wealth is a gradual processPractically everyone would love to be an overnight success — hence the popularity of get-rich-quick schemes. But the reality is that very few people become millionaires in a year or two. Millionaires and future millionaires know that building wealth takes time, and it isn’t all that exciting. It’s really just about following good financial habits year after year, including:Spending less than you earnSetting aside a portion of your income to put in your savings and invest (10% is a good place to start)Avoiding high-interest debt, such as credit card debtInvesting in the stock market to grow your moneyWhere people get into trouble is when they try to take shortcuts, such as day trading or putting all their money in crypto. High-risk strategies like these usually end up costing you time and money. Slow and steady is a much better way to build wealth.

By: Brittney Myers |
Updated
Nov. 12, 2023– First published on Nov. 12, 2023

Many of the perks of flying business class on long-haul flights are well known. The lie-flat seats, for instance, are an iconic image of flying in luxury. And let’s not forget the multi-course meals featured in so many social media posts.These flashy amenities may be Insta-worthy, but they’re not the only pros to flying business class. Here are some of the lesser-known amenities you may also enjoy.1. Priority check-inThe benefits of business class start long before you board the plane. And it all begins at the check-in counter. Many airlines offer accelerated check-in and baggage handling, with dedicated counters for business and first-class passengers. This is obviously less important to folks who check in online and don’t check any baggage. But if you’re taking a long-haul flight, chances are good you have some luggage to check. Being able to waltz past the lines and crowds to check your bags gets the trip off on the right foot.2. Expedited security screeningSpeaking of long lines…not looking forward to waiting in the ones for security? You may not have to if you’re flying business class. Some airlines offer an expedited security line for frequent flyers, including some business class passengers, that can get you through in a fraction of the time. Whether there is an expedited security line will depend on the airport and airline. It’s worth asking at the check-in desk if the service is available (and where to go if it is).Pro tip: You don’t need business class tickets to get through security faster. TSA PreCheck can help you sail through security once you’ve qualified. Even better, a lot of travel rewards cards will pay for it.3. Lounge accessA fantastic feature offered by many airlines for international business class is access to the airline’s lounge. This is especially appreciated when it’s an airline with lounges I wouldn’t normally be able to access with my credit cards.It’s important to note that not all upper class tickets get lounge access. And not all lounge access is made equal. Here are some general considerations:Domestic first class typically won’t get you into the lounge.International business or first class nearly always have lounge access.If your airline doesn’t have a lounge, you may still have access to partner lounges.Even business class doesn’t get you into the most exclusive lounges. For example, American Airlines Flagship First international first class passengers have access to dedicated Flagship First lounges in several airports.4. Dedicated flight attendantsOne of the reasons business class service is so much better than other cabins is the staff. The flight-attendant-to-passenger ratio is simply much lower in business class; in other words, each flight attendant has fewer people to assist. This makes service much faster, as well as more personal. (Don’t discount the personal part; you get to know each other well over the course of an eight-hour flight.)5. Toiletries and pajamasThe big selling point of business class on an international flight is the lie-flat seats that turn into beds. Being able to stretch out completely and sleep is a luxury that cannot be overstated. The only problem? Your toiletries and sleepwear are probably packed.Happily, your business class seat will usually come with a handy little zippered pouch full of helpful toiletries, often including:Lip balmA toothbrushA tube of toothpasteAn eye maskEarplugsSocksBut that’s not all. Some airlines will also offer you a set of complimentary pajamas so you can sleep in comfort. However, unlike the amenity kits, which are often waiting on your seat when you board, you’ll likely need to request a pajama set from a flight attendant.Upgrade to luxuryIf you have to be stuck in a tiny metal tube for an eight-hour international flight, you may as well make that tube as comfortable as possible. Flying business class is how you do just that.The downside to all that luxury? Zeroes. As in, add a couple zeroes onto the end of your ticket price if you want to upgrade to business class. (A quick search right now shows one-way business class fares from the east coast of the U.S. to Europe going for $3,000 and up.)Or, you could use your credit card rewards. Pretty much all of my favorite travel rewards cards come with welcome bonuses large enough that you could get at least a one-way business class flight to most destinations. With a little planning — and some strategic welcome bonuses — you could travel in luxury nearly for free.