If you spent more time watching the World Cup competition than reviewing your finances, you’re not alone. Millions here and around the world began tuning into Cup matches last month, with the final game scheduled for July 19th. It was a welcome diversion from worries about inflation, although the annual inflation rate slowed to 3.5% in June, down from May’s 4.2%.
Home Financing
Should Your Extra Cash Go Toward Extra Mortgage Payments?
If you’ve achieved some long-term financial goals or received a salary raise, you may be revisiting your monthly budget and deciding what to do with the additional funds. Here are a few things to keep in mind.
If your current mortgage has a lower interest rate, you may want to consider investing your extra cash instead of paying down your mortgage. For example, you could check out high-yield products like Certificates of Deposit (CDs) or a high-yield savings account.
Here are some other tips to keep in mind.
Be sure to preserve your financial liquidity. It may be a better idea to move additional funds into an emergency savings account. If you increase your monthly mortgage payment too much, you could end up with a temporary cash flow problem.
Pay down any higher interest debts first. If you have balances on higher-interest credit cards, student loans and/or car loans, it’s recommended that you take care of these first.
Last but not least: while mortgage interest can be tax-deductible, your deduction may shrink along with your mortgage balance.
This article is provided for general informational and educational purposes only and does not constitute tax, legal, or financial advice. The information presented regarding mortgage interest deductions is general in nature and may not apply to your specific financial situation. Tax laws are subject to change and can vary based on individual circumstances.
Source: marcus.com
Insurance
Automotive Gap Insurance: What It Is, When You Need It
If you’ve recently been shopping for a new car or truck, you’re aware of how much sticker prices have risen. This is why you may want to consider adding gap insurance coverage to your mandatory auto insurance coverage.
Gap insurance covers the “gap” between what a vehicle is worth and what the driver owes on their auto loan or lease if the car is totaled or stolen. Without gap insurance, you may end up paying the remaining loan or lease balance, even if the vehicle’s been written off or not recovered.
You may want to consider getting gap insurance if:
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You made a small down payment on an expensive vehicle,
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Are leasing the vehicle,
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Have bought a vehicle that’s expected to depreciate quickly; or
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If you opt for a longer auto loan term. This makes it likely that you’ll have negative equity for a period of time.
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If you’re thinking of purchasing this insurance, keep in mind that you must be the original loan or lease holder, and that the vehicle being insured is fairly new (not more than 2-3 years old).
While gap insurance may be offered to you by the dealership when you’re finalizing your purchase, your insurance provider may offer coverage at a lower price. You may also want to ask your auto loan provider about gap insurance. If you’re leasing, check the small print: these often include gap coverage or a waiver of “gap liability” by default.
This article is provided for general informational and educational purposes only. We are not a licensed insurance agent or broker; we do not sell, solicit, or provide insurance advice. Before making any coverage decisions, consult a licensed insurance professional and review your specific policy documents to determine what is appropriate for your individual situation.
Source: wallethub.com
In the News
Workforce Pell Grants Go Live
Considering that the average costs to attend college have increased over 40% faster than the rate of inflation, many Americans think a higher education isn’t worth the price. However, an alternative to college loans is now available.
The new policy, known as Workforce Pell, widens the scope of federal Pell Grants by helping lower-income learners pay not just for associate or bachelor’s degrees, but for nondegree job training as short as eight weeks. Students may apply for a Workforce Pell and become qualified for positions in high-demand fields including nursing, welding, automotive repairs and HVAC.
Workforce Pell is a welcome expansion to federal education grants, and funds became available this month. However, many would-be applicants aren’t aware they exist. In addition, some states are still identifying the training programs that satisfy the eligibility requirements.
If you or a family member would like to learn more about Workforce Pell, click here to visit ACT’s Workforce Pell web page.
Source: hechingerreport.org
Credit and Consumer Finance
How This Year’s World Cup Is Affecting Global Pocketbooks
Every summer, there’s a moment when the school supply lists come out and parents start doing math in their heads. This year, that math is harder than usual.
Families across the country are getting ready to spend on notebooks, backpacks, clothes, and school supplies, and the price tags are adding up. Surveys this year show a mixed picture, but the theme is the same everywhere you look: shoppers are spending real money on back-to-school, and they’re feeling it. One national survey found that 62 percent of shoppers are hunting for sales this year, up from 52 percent last year. Another found that a quarter of parents are cutting back on back-to-school spending specifically because everyday costs have gotten more expensive.
At the same time, the broader numbers on how people feel about their finances have been sliding too. Consumer confidence dropped for the third month in a row in July, and higher grocery and gas prices are a big reason why.
Back-to-school shopping isn’t optional. Kids need shoes that fit and supplies for class, whether or not the family budget feels comfortable that month. That makes it a good stand-in for something bigger: the everyday cost of living has crept up, and families are adjusting how they spend, not whether they spend.
You don’t need a survey to tell you this if you’ve stood in the school supply aisle lately. But it’s worth naming, because a lot of people feel like they’re the only ones falling behind on their budget. They’re not. Comparing prices, shopping sales, and rethinking what’s a need versus a want are becoming the norm, not the exception.
If back-to-school costs are stretching your budget this year, you’re in good company, and there’s nothing wrong with looking for ways to make your money go further. That might mean shopping sales, spacing out purchases, or simply being more deliberate about what you buy first versus what can wait.
A tight month here and there is normal. But if this is starting to feel like a pattern rather than a one-time squeeze, it’s worth stepping back and looking at the bigger picture, not just this month’s budget. Sometimes that kind of squeeze is a sign it’s worth checking whether your mortgage payment still fits your life, or whether equity you’ve built in your home could help cover a specific need without adding new high-interest debt.
You don’t have to figure this out alone, and you don’t have to make any big decisions today. If tighter months have you wondering whether your home loan still makes sense for where you are now, an APM Loan Advisor can help you look at your options. Every family’s situation is different, and we’re here to help you see what’s actually available to you, no pressure, no sales pitch.
Source: nerdwallet.com
Did You Know?
The 1776 Economy of the 13 Colonies
When the Founding Fathers signed the Declaration of Independence, low-tech ruled. Agriculture was the economy, with an estimated 95% of laborers (many enslaved) working long hours on farms and plantations. This meant that the 13 colonies’ economy could be tipped into a recession by bad weather.
Farmed and fished commodities like tobacco, flour, rice, dried fish, whale oil, and indigo were the colonies’ biggest exports. Described as “blue gold”, indigo was used to dye military uniforms and royal robes. During the 1770s, it accounted for 25% of all colonial exports.
Well-dressed colonials imported expensive silks, wool and brocade materials from Britain. They also imported sugar from the Caribbean. Firewood was the most popular energy source, and it represented 18% of the colonies’ GDP.
During this time, American colonists were technically the most prosperous people on Earth, enjoying higher incomes than their English counterparts. According to historians’ estimates, an average American earned almost 14 pounds per year, compared to 10 to 12 pounds for a Briton. Plus, colonial wealth was more equally distributed, with over 50% of white Americans being property holders while fewer than 5% of the aristocratic English owned land.
Instead of flaunting their wealth by carrying an Hermès Birkin bag or driving a Rolls-Royce, affluent merchants and planters went for a dinner party display of a single pineapple, which could cost around $8,000 in today’s dollars. (Those who couldn’t afford to buy one often rented one.)
Sources: morningbrew.com
