Money Questions and Answers

How Realistic Is The Cash Only Lifestyle?

The following is a guest post by Steve Repak, CFP™. Steve is the author of “6 Week Money Challenge For Your Personal Finances“, a simple, step-by-step program founded on biblical principles paired with a CFP®’s understanding of modern wealth-management strategies.

How realistic is the cash only lifestyle? If you are in debt, you have probably heard over and over again that you should quit using credit cards and stick to cash only purchases.

In a previous article, I explained that for some people it actually hurts to break a large bill like a $20 so only using cash may help you get your spending under control. I wanted to share some of the risks and benefits of a cash only lifestyle and also show that you can still get out of debt if you want to use credit cards. If getting out of debt is your goal, there are three things you must do in order to succeed regardless of whether you use cash or credit:

Spend less money than you take home each week
Build an emergency savings
Develop and follow a get-out-of-debt plan

How Realistic Is The Cash Only Lifestyle?

Cons of using cash

One of the biggest disadvantages of carrying cash is that you can lose it! If you lose your credit card you can cancel it and order a new one but I am afraid you just can’t do that if you lose your cash.

If you use an ATM to withdraw cash you may be charged fees, which is like throwing money away. Worse yet, flashing cash can make you a target for thieves.

Is it Ever Appropriate to Invest While in Debt?

by Jeremy

Should you invest while still in debt? When should you start investing? You may want to start investing despite still being in debt.

Is it ever appropriate to invest while in debt? The presence of the word “ever” in that question should be a hint that the answer is “yes”. If you figured that already, then good for you and right you are.

Is it Ever Appropriate to Invest While in Debt?

But it’s a “yes” with qualifications. Investing while in debt should be the exception to the rule. There are, however, a number of exceptions, some of which we’ll talk about here.

Investments that can be engaged in with skill, like binary options trades through Banc de Binary, are one such exception. These are trades that can be completed in seconds, which have the potential to multiply invested amounts several times over.

For those skilled at this method of trading, it’s a great way to make money, and can be used to gain the funds necessary for total debt cancellation. It’s also a risky proposition and one that should only be taken part in with money that won’t be missed if the investments don’t pan out. But for people who enjoy past paced and fun investment models, this can be a great one to add to your repertoire.

Most of the argument against investing while in debt comes results from a simple concept: debt tends to add up much faster than wealth. Investors hope for 7-9% annual returns from mutual funds and other stock market gains. But high interest credit card debt can accumulate at 25% annually – sometimes even more!

The math is simple. You won’t make money if you’re taking on debt faster than you’re growing wealth. If you have high interest consumer debt, there is almost no good reason to invest until it is paid off.

6 Ways to Find Cheap Flights Without Frequent Flier Miles

by Hank Coleman

Although airfare has been slightly cheaper lately thanks to low oil prices, the cost of flights is still outrageously expensive when you consider how little you get out of it. A tiny seat, one free checked bag (if you’re lucky), a soda, and some peanuts? Is that really worth hundreds of dollars? Flying can be expensive. But, it doesn’t have to be that way. There are ways to still find cheap flights even without using frequent flier miles. If you have no choice but to fly, there are many ways to avoid expensive airline tickets. Well-seasoned travelers usually get airline-branded credit cards and rack up miles towards discounted or free flights later. However, if you’re an occasional air traveler without … Read more

Reader Question: What To Do If You Get Audited By IRS?

by Hank Coleman

This is the next installment in the Reader’s Questions Series, which highlights questions emailed to me by you, the readers of Money Q&A.

Be sure to find out at the end of this article how you can receive a free copy of Dave Ramsey’s book, The Total Money Makeover if I feature your money question on the next blog post. If you’re not familiar with Dave Ramsey’s book, you should run right out and get it. It’s one of the top ten best personal finance books you should read.

Today’s question comes from Ben who asks about being audited by the US Internal Revenue Service (IRS).

What steps should you take after being notified that the IRS is going to audit you?

What happens if IRS audits you?

It can be scary to find yourself audited by IRS. What should you do? What are the first steps to take when you’re audited by the IRS? Here are the steps.

The vast majority of audits conducted by the IRS are what’s called, correspondence audits. That means the IRS sends you a letter that you must answer. Typically, the IRS asks about income from their records, 1099s, and the like that do not match what was reported to the IRS by your bank, employer, investment firm, or contractor.

Correspondence audits are low-level inquiries from the IRS, and they account for 80% of the audits from the IRS to American taxpayers. But, you should take the notice seriously. You need to respond within the allotted timeframe that the IRS sets in your audit letter, and you need to respond with the information that they have requested.

But, what should you do with a full blown audit? What steps should you take with an audit by IRS?

Which Wholesale Warehouse Club Membership is Best for You?

by Hank Coleman

The two most popular warehouse clubs in the US are Costco and Sam’s Club. Each membership in the warehouse wholesale club comes with its own unique benefits and this comprehensive guide will help you decide which one is best for your shopping needs.

Which Warehouse Wholesale Club Membership Is Best?

Warehouse Wholesale Club Size and Locations

In terms of warehouse size, Sam’s Club averages 176,000 square feet per warehouse, while Costco warehouses average 143,800 square feet. Both retailers sell thousands of items online as well. There are 651 Sam’s Club locations in 47 US states and Puerto Rico, though if you’re a Canadian customer then you may want to go with Costco because the only six Canadian Sam’s Club warehouses shut down in 2009.

Costco has a wider reach with 689 warehouses spread out across 43 US states and Puerto Rico (481), Mexico (36), Canada (89), the U.K. (27), Spain (2), Taiwan (12), Korea (12), Japan (23), and Australia (8).

Verdict: Sam’s Club seems to be lagging when it comes to location availability. Unless you live in a state without a Costco, your best bet for domestic and international warehouse access is with a Costco membership.

Warehouse Membership Prices

Sam’s Club wins the membership price war with their basic “Sam’s Club Savings” and “Sam’s Club Business” memberships selling for $45 annually. These memberships include buying access to Sam’s Club online and warehouse inventory items, discounts on eyeglasses, instant savings deals, free store pick-up, and potential eligibility for the Sam’s Club MasterCard.

The Sam’s Club Plus membership for $100 per year includes the basic member amenities, as well as cash-back rewards on purchases ($10 for every $500 spent, up to $500 cash-back per year), over 200 generic medications for $4 for a 30-day supply and 400 generic medications for $10 for a 30-day supply (as well as 5 free medications with a prescription), and extra service protection for several non-electronic items purchased through Sam’s Club.

Sam’s Club also offers 1-day shopping passes for non-members to check out their warehouse and website; if you decide to purchase something then there will be a 10% surcharge added to your order.

Although Costco does not offer a 1-day pass to potential members, it still offers low-priced memberships starting at $55 per year for the Business and Gold Star memberships. Unlike Sam’s Club memberships – which charge you extra for additional members added to your card – Costco lets you add one member to your card at no additional cost (it must be a spouse or immediate family member living at the same address as you, however).

Costco’s upgraded memberships, the Executive Business or Executive Gold Star, cost $110 per year and come with added benefits such as free roadside assistance for cars covered through Costco’s auto insurance program, 2% rewards on most Costco purchases, and extra discounts on Costco’s travel services.

Verdict: If membership price is the main factor you’re considering when deciding between Costco or Sam’s Club, Sam’s Club takes the cake with lower annual costs and excellent member benefits at all membership levels.

Using Automated Investing on Lending Club for Passive Income

by Hank Coleman

Lending Club Passive Income With Automated Investing

I’m a fan of Lending Club. I always have been. I’ve been using the service for years, and I’ve even appeared on Fox Business praising the investment service. I’ve grown to enjoy the Lending Club passive income that my investments in loans pays me each month, and I put that passive income back to work in new, additional loans. In the past, I had to do all of the legwork myself. I had to find new loans on Lending Club to invest in. Now with Lending Club’s Automated Investing, the website does all the work for me. Lending Club is a great investment. The loans that you invest in can be a great addition to your overall investment portfolio. It has a … Read more