Connect with us

Personal Finance

Warning: Having a Lot of Money in Your Bank Account Isn’t Really That Good For You

Avatar

Published

on

Most of the time it seems as if the only thing we can afford to pay is our bills. We may find it troublesome even though we know that we have to pay them as we fork over out hard earned money bitterly. Other times, we feel happier because we realize we saved up enough to go on that Disney trip or spend that weekend treating ourselves. When things are working out great, there is a skip in our step, and when things are not working out, there is a chip on our shoulder.

The average household often experiences a balance of the two on a yearly basis. Nonetheless, with the recent positive changes that has been going on in our economy, the same people who are so used to struggling to make ends, are the same people who are doing much better today. Most people who have extra money will keep their funds safely in their bank ready for to use when they need it.

More Americans are depositing money into their checking accounts more than ever, and it actually not that great. According to the economic research firm Moebs Services, the typical checking balance account had $5,459 during the first quarter of 2015. That number is over twice the amount is used to before 2008. The influx may be due to a few reasons. A part of it is because more people are working or earning more money than they did before.

There are others, though, that still feel uneasy at the volatility of the economy. In their eyes, it is a smart idea to store that money to be able to use it for any adverse event. Another reason may be because consumers would rather add more funds to their bank balances as a method of avoiding low-balance charges that several banks are now charging.

Regardless of the reasons, keeping an excess amount of funds in your checking account also means that you are missing out on higher returns somewhere else.

What You Can Do

First, track your spending.   It’s better to keep a daily spending log for the next three months rather than estimating or guessing. During the next 90 days, you want to monitor every purchase you make, including bills and other payments that are withdrawn from your account automatically. Sometimes are funds that get spent at times without much thought, and it just seems to vanish. If added that if you were to record every dollar, you should be able to see precisely where it’s spent.

The minute you understand the minimum amount of money you need to have in your account, then you can take the excess and use it somewhere else. May experts recommend 4-8 weeks worth of living expenses, then add another 30% to that amount.

Why should you add that extra amount? A good chunk of revenue that banks earn is from charging their customers overdraft fees. In the event an unplanned charge for a one-off purchase occurs, the extra cash will help prevent your bank balance into the negative pit.

What You Should Do With The Additional Funds

You should take the excess funds out of your savings account because keeping in the banks means you never accrue any interest. No matter how old you are, you may want to start thinking about opening another retirement account or add more funds to an existing one you already have.

Alternatively, you can open a high-yield savings account. Several online-only banks offer consumers interest-bearing checking accounts that may also serve as a wonderful option to keep that cash. You can also even look into a CD. There are plenty of alternatives open to you other than just allowing it to sit in your checking account and not do a thing for you.

 

Business

Millionaires Sign Petition To Voluntarily Increase Their Own Taxes

Avatar

Published

on

Millionaires Sign Petition To Voluntarily Increase Their Own Taxes

A group of millionaires has signed a petition asking for the government to force them to pay higher taxes. They did so in an effort to help the global recovery from the coronavirus pandemic.

The group, which includes the likes of Ben & Jerry’s co-founder Jerry Greenfield, Walt Disney Co. heiress Abigail Disney and former BlackRock managing director Morris Pearl, call themselves “Millionaires For Humanity.” Their sole objective is to encourage governments to increase taxes on the world’s wealthiest individuals to help pay for the billions of dollars needed to support health care, schools and security.

The letter states: “As Covid-19 strikes the world, millionaires like us have a critical role to play in healing our world. No, we are not the ones caring for the sick in intensive care wards. We are not driving the ambulances that will bring the ill to hospitals. We are not restocking grocery store shelves or delivering food door to door. But we do have money, lots of it. Money that is desperately needed now and will continue to be needed in the years ahead, as our world recovers from this crisis.”

Millionaires Call for Higher Taxes

The letter continues by asking governments to raise taxes on “people like us. Immediately. Substantially. Permanently.”

The group warned that the impact of the crisis will last for decades. They also mentioned that it could push 500 million people into poverty. Hundreds of millions of people are at risk of losing their jobs, many permanently, the group said. Nearly 1 billion children are out of school due to the pandemic. They also mentioned that many of these kids lack any resources to continue their education.

The petition adds, “Unlike tens of millions of people around the world, we do not have to worry about losing our jobs, our homes, or our ability to support our families. We are not fighting on the frontlines of this emergency and we are much less likely to be its victims.”

“So please. Tax us. Tax us. Tax us. It is the right choice. It is the only choice.”

This petition serves as Pearl’s second attempt to make millionaires – himself included – pay higher taxes.

A Similar Call

He wrote a letter last year supporting the “millionaire’s surtax” introduced in Congress. In it, he said any new tax plan has to be “relatively easy to enact and relatively hard to avoid.”

“Rich people like me are good at dodging taxes. We can lobby to stop new taxes from ever becoming law, or if they do get enacted, find loopholes to get around them.”

“Any plan to tax me and my fellow wealthy Americans needs to be relatively easy to enact and relatively hard to avoid,” Pearl also said.

The millionaire’s surtax, as Pearl points out, would only affect married couples making more than $2 million per year. Alternatively, it also affects a single tax filer making more than $1 million.

“This tax would simply add 10 percentage points to the existing tax rates paid by couples making over $2 million a year and singles making over a million. Though it would only apply to the wealthiest 0.2 percent of taxpayers like me (or about 330,000 taxpayers) the millionaires surtax would raise an estimated $635 billion over 10 years, according to the Tax Policy Center.”

Pearl’s Motivation

Pearl, undoubtedly knowing that many will doubt his motives, says he’d rather pay higher taxes than see his country falter economically.

“You may well ask: Why would anyone push to pay higher taxes, like I’m doing by supporting the millionaires surtax? It’s because I know it’s not actually in my long-term economic interests for the United States to become more and more like a developing nation, with a tiny elite at the top of the mountain and everybody else struggling for a foothold.”

Thus far, 80 individuals have signed the Millionaires For Humanity petition.

Up Next:

Continue Reading

Business

Dems Can Only Blame Pelosi For Failure To Secure More Stimulus Money

Avatar

Published

on

Dems Can Only Blame Pelosi For Failure To Secure More Stimulus Money

The next round of stimulus money will unlikely include any major concessions for Democrats. With this, the party has nobody to blame but Nancy Pelosi.

Astonishingly, that opinion comes from David Dayen, the executive editor of The American Prospect. The said magazine stays “dedicated to liberalism and progressivism.”

In a recent article titled “A Leader Without Leading,” Dayen says during the passage of the last stimulus bill in late April, Pelosi – along with Sen. Chuck Shumer – chose to forego adding their wishlist to the bill, believing they would have another shot. That shot, thus far, has never materialized.

“Republicans wanted more money for forgivable loans for small businesses. Democrats had a host of liberal priorities left out of prior legislation that could have been paired with the extension. But Pelosi and her Senate colleague Chuck Schumer chose to go along with the Republican framework, leaving everything else for later.”

“Immediately afterward, Senate Majority Leader Mitch McConnell hit the pause button on future legislation. It felt like the Democrats were played.” said Dayen.

Credits for the Republicans

He also credits the Republicans for knowing exactly what they wanted out of each stimulus bill. The Republicans did so all while Pelosi fumbled away every opportunity.

“When the coronavirus spread and lockdowns buckled the economy, Republicans knew exactly what they wanted—protect large corporations and investors—and pursued it unerringly. Pelosi had no coherent agenda to fall back on. She’d spent the past year advancing complex, multifaceted bills and watching them wither in Mitch McConnell’s legislative graveyard.”

Dayen adds, “H.R. 1, the House’s signature legislation during this Congress, which attempted to nationalize voter registration, establish nonpartisan redistricting commissions, add ethics standards to the Supreme Court, add a voluntary public-financing option for campaigns, require presidents to release tax returns, disclose donors for super PACs, make Election Day a holiday, and about 20 other things in a single bill, is a perfect example of this syndrome. There’s no single narrative to grab onto, just a mélange of advocacy group–approved planks. This left House leadership unprepared as the pandemic began its march.”

Pelosi worked on the earlier stimulus bills. While doing so, she allowed the Republicans, led by Mitch McConnell, to craft the CARES Act. Dayen says this meant that Democrats “just got to tweak McConnell’s work, without altering its tilt toward the powerful.”

Pelosi and the HEROES Act

Dayen’s takedown on Pelosi ends with her “pie-in-the-sky” HEROES Act. Somehow, she even managed to make a mess of her own bill.

“Incredibly in the midst of a crisis, was a Pelosi tendency that had grown over the years: obsessive concern with deficits. Pelosi rolled back student debt relief in the HEROES Act after learning that it would cost $100 billion more than expected. This was a $3.2 trillion messaging bill not designed to become law, yet an additional 3 percent cost was considered unacceptable. Pelosi also declined to add “automatic stabilizers” that would maintain expanded benefits until economic stress dissipated, blaming a Congressional Budget Office scoring quirk that made the cost appear artificially larger.”

“So with over 30 million out of work, the important thing to Pelosi was that her pie-in-the-sky, going-nowhere bill was ‘reasonable,’ based on some ineffable standard of reason…”

“Devotion to deficit hawkery in normal times is unwise policy. It’s downright fatal during an economic crisis, where relief could be yanked away from needy families prematurely simply because of an unwillingness to challenge CBO’s scoring model.”

Many expect lawmakers to vote on the next stimulus bill sometime after July 20. If you hear Democrats complaining about how “unfair” the bill is, just remember who is negotiating for their side.

Up Next:

Continue Reading

Business

Why You Should Consider Filing For Social Security At Age 62

Avatar

Published

on

Why You Should Consider Filing For Social Security At Age 62

Earlier this week we discussed four common regrets that retirees have when they look back at their golden years. One of the most common regrets was filing for Social Security benefits at 62, the earliest possible age. According to the Social Security Administration, about 1 out of 3 people apply for benefits at that age.

The regret is that if they had waited longer to file for their benefits, their monthly check would be much larger. For example, by delaying filing for Social Security until age 70, your monthly benefits can be as much as 75% larger than someone who filed at age 62. That’s because benefits grow by a guaranteed 5% to 8% each year that you delay your claim.

But there are always two sides to a coin. Today we wanted to discuss the benefits of filing for Social Security as soon as possible. With this, you can decide which approach you believe will benefit you the most.

The Case For Filing Social Security Early

The earliest you can file for Social Security benefits is age 62, but each month you file before reaching your full retirement age (FRA) cuts your monthly benefit amount. As an example, if your full retirement age is 67 and you start your claim at age 62, your monthly check will be reduced by approximately 30%.

Despite the reduced monthly benefit that comes with filing early, tens of millions of Americans make that decision every year. And it boils down to one line:

We have no idea what the future holds.

The financial benefits of waiting until age 70 to claim Social Security make complete sense. But we don’t know how long we will live, so we don’t know if the trade-off is worth it. If we knew we would live a long, healthy life until age 100, we would all delay filing until age 70 and reap the maximum reward.

But if you decided to wait until age 70 to claim, and unfortunately passed away before that, you would have foregone all the retirement income from age 62 on.

Waiting to file is a gamble, but so is giving up guaranteed monthly income starting at age 62.

Deciding when to claim your benefits requires serious thought and shouldn’t be a hastily made decision. And we aren’t saying that filing Social Security immediately at 62 or waiting until age 70 is the right choice. Every situation is different. If you are still healthy and working, waiting a few years passed 62 to claim but not all the way to 70 might be a good compromise. You’ll get a larger check than had you claimed right away, and your regular working income can make up for some of the reduced benefit amount since you didn’t wait until age 70.

The most important thing, whether you file at 62 or 70, is to find enjoyment in your golden years.

Up Next:

Continue Reading
Advertisement

Facebook

Trending

Copyright © 2019 The Capitalist. his copyrighted material may not be republished without express permission. The information presented here is for general educational purposes only. MATERIAL CONNECTION DISCLOSURE: You should assume that this website has an affiliate relationship and/or another material connection to the persons or businesses mentioned in or linked to from this page and may receive commissions from purchases you make on subsequent web sites. You should not rely solely on information contained in this email to evaluate the product or service being endorsed. Always exercise due diligence before purchasing any product or service. This website contains advertisements.