A family member’s unpaid debt is usually paid from their estate before their will is settled. In some cases, if the assets remaining are not enough to repay the debts, heirs could be liable. 

A study by the National Bureau of Economic Research found that 46.1% of American seniors die with less than $10,000 in assets. And it’s possible that outstanding debts could top this amount. Here’s everything you need to know about what happens to debt after your family member dies. 

My Family Member Left Unpaid Debt, Now What?

Don’t worry about suddenly becoming legally responsible for the debt of your deceased parents, grandparents, or siblings. Even if they die with unpaid debt, these debts don’t legally pass to you. 

However, if your spouse dies, you might be on the hook for their debts. Most of the time, you won’t be, but this varies by state. 

You’ll be responsible for a deceased’s debts if you’ve acted as a cosigner on a loan or mortgage for a family member who died. The same goes if you’re the joint account holder on a credit card. And, in some states, if you own property with someone who’s died, their estate has to pay any outstanding bills. 

Keep in mind, if you live in a community property state you might be liable for the debt of your spouse. There are nine community property states: 

• Arizona

• California

• Idaho

• Louisiana

• New Mexico

• Nevada

• Texas

• Washington

• Wisconsin

In these states, spouses share debts. Creditors could be able to use community property to satisfy debts, but the specifics vary by state so consult an attorney in your area to understand your rights. 

Lastly, if you cosigned medical bills for a loved one when they entered the hospital, you could be on the hook for costs that aren’t covered by insurance. This also varies by state. 

Contact From Debt Collectors

Even though it could feel traumatic, debt collectors are allowed to contact you if your spouse has died and left a debt. However, they’re not allowed to claim that you’re responsible for the debt unless you were a joint account holder or cosigner. Barring that, they’re only authorized to contact you for information about the executor of the estate so they can attempt to recover payment. 

Since the deceased’s estate is still responsible for the debt, a debt collector could file a claim against the estate. However, unless you fit into the specific circumstances listed above, they can’t claim that you’re legally responsible for the debt. This is true even if you are the executor of the estate. 

How to Deal With Inherited Debt

If you’re legally obligated to pay the debt left by a deceased family member, you’ll have to take steps to repay it. Not paying debt, such as a mortgage you cosigned or a credit card for which you’re a joint account holder, could have a negative impact on your credit. This includes affecting your ability to receive financing in the future. Creditors can even go as far as to garnish your wages, in some cases. 

What Happens to a Mortgage When a Spouse Dies?

Family members who inherit a property are allowed to take over the mortgage from a loved one who’s died. Federal law excludes heirs from having to prove they can actually repay the funds before assuming the mortgage.

Although this gives you some flexibility to determine how to come up with the mortgage payments, it can also be stressful if you truly can’t afford the rest of the mortgage. You can always ask the lender about modifications you can make to the mortgage to help the payments fit your budget. 

If you decide you don’t want to pay the remaining funds left on the mortgage, you can opt to sell the home or allow the lender to foreclose. 

Preventing Unauthorized Debt

The executor of your loved one’s estate should let all lenders know of your loved one’s death so they can settle the accounts. These lenders will then report your loved one as deceased to the credit bureaus. This can prevent any scammers from attempting to rack up additional debt in your family member’s name. 

Typically, the funeral home also notifies the Social Security Administration (SSA) of your loved one’s death if you provide them with their Social Security number. You can also do this yourself over the phone or in person at an SSA office. 

Facing Secured Loans

There’s a chance you might face a creditor over items that were used to secure loans. For example, let’s say you owned a car jointly with your spouse, and the auto loan is in your spouse’s name. If your spouse dies and their estate can’t repay the loan, you might find yourself battling a creditor who’s trying to repossess your car. 

For this reason, reach out to lenders of secured loans, immediately, to notify them of a death and arrange a payment plan. 

Paying Joint Debt

If you were previously a cosigner or a joint account holder, you can find yourself legally responsible for debt that you can’t afford. In this case, one option is to look at refinancing the debt to potentially obtain a lower interest rate or longer term.

If you’re having trouble or feeling overwhelmed handling a new set of bills, consider obtaining professional financial advice. You can often get free or low-cost credit help from nonprofits or credit unions. When doing so, be sure that anyone you receive advice from is accredited by the National Foundation for Credit Counseling or the Financial Counseling Association of America.

How to Protect Your Family From Inheriting Debt

People commonly take steps to prevent passing on their debt after death by obtaining a life insurance policy that provides such coverage. There are several versions of life insurance that could help your heirs pay any of your remaining debt. Remember, always compare life insurance companies online to make sure you’re getting the best deal for your circumstances. 

Credit Life Insurance

You’ll typically be offered credit life insurance when obtaining your mortgage, or another major loan such as an auto loan. If you obtain credit life insurance, when you die your loan is repaid based on your policy. 

As your loan matures and the outstanding amount lessens, so does the death benefit of the policy. Because credit life insurance is a guaranteed issue, it usually doesn’t require a health screening. Keep in mind, that credit life insurance isn’t paid to your heirs but directly to your creditor. 

Term Life Insurance

The death benefit from term life insurance can also be used to repay a debt. If you have a large source of debt, like a mortgage, you could opt to purchase term life insurance to last the entire term of your loan. You can also opt to cover debt for which you have a cosigner with a life insurance policy. 

For example, let’s say you have a $1,000,000 mortgage — so you’d want a death benefit that covers this cost. Term life insurance only pays the death benefit if you die within the term of the policy. If your mortgage has a 30-year term, you’d likely want a term that covers the same time period. 

Your monthly premiums are determined by the length of your term, death benefit, age, and possibly other factors such as your health. The annual premium for a $1,000,000 term life could range anywhere from $514 (for a 20-year-old female) to $1,894 (for a 40-year-old male) for a 30-year term.  

Be sure to name a specific beneficiary so the life insurance doesn’t go directly to your estate, where creditors might have access to it. 

Whole Life Insurance

Though typically more expensive, whole life insurance builds cash value throughout your lifetime which you can withdraw to repay debts while you’re still alive. Your heirs can also use the death benefit to pay debts such as a mortgage or auto loan. 

Whole life insurance premiums also vary based on the age you are when you obtain your insurance, gender, age, and policy amount. Health can also impact your premiums. For example, being a smoker can cause your life insurance to be more expensive. 

Whole life can be significantly more expensive. For example, a 40-year-old woman might be quoted $80 per month for a 20-year, $1,000,000 term life policy, and $1,000+ per month for a $1,000,000 whole life policy. 

The Bottom Line

Although there are many scenarios where you’re not liable for a deceased loved one’s debts, there are enough ways you can be liable to cause a significant financial crisis if you’re unprepared. 

One of the best ways to prepare is ensuring your loved one has enough life insurance to cover their debts, and that you’re named as a beneficiary. This could be particularly important if you’re the cosigner on a loan or if you’re concerned about affording the mortgage on a home you share with your family member. 

The post How to Manage Unpaid Debt From a Deceased Family Member appeared first on Good Financial Cents®.

As online stores gain momentum, many are starting to wonder, “How can I make money with Shopify?” If you’ve dreamed of starting a business or using Shopify as a side hustle, here’s everything you need to know about getting started.

Whether you’re a brick-and-mortar store contemplating a pivot to digital or a business-minded individual looking to get into the ecommerce game, Shopify can remove many of the roadblocks to getting started with selling online.

What Is Shopify?

Selling goods online wasn’t always easy. Creating a website connected to an online store that could securely process payments was once a task that required significant technological savvy. Shopify simplifies this process by creating a platform that easily allows business owners to create and manage an online store. 

Shopify can’t make you rich, but it can provide you with the appropriate tools to build an online business. It is a platform that serves your business goals. Whether you’re a brick-and-mortar store contemplating a pivot to digital or a business-minded individual looking to get into the e-commerce game, Shopify can remove many of the roadblocks to getting started with selling online.

Want to learn about other ways to money?

Ways to Make Money With Shopify

Small business ideas come in all shapes and sizes. Keep in mind that Shopify is a tool for your small business, you can find ways to incorporate it into a business you already have or use Shopify as the starting point for a new business. There’s more than one way to make money with your Shopify store. Here are several popular ways to approach making money with Shopify.

Create an E-commerce Store

Whether you’re a brick-and-mortar retailer looking to pivot to digital or an online seller, setting up a Shopify store is simple. You can sell both goods and services, and Shopify makes the checkout process simple for your customers. 

If you already have a website, you can add a Shopify store to it. Or, you could create a store directly on Shopify using one of their templates that will become its own website. If you’re not sure you have what it takes to get started, you could also consider purchasing a store that is already running from a current Shopify user. This can be done on Shopify’s official Exchange Marketplace. 

Keep in mind that setting up your store is just the beginning. Once you get it running you’ll need to focus on optimizing it to ensure you’re maximizing your revenue. One of the first optimization techniques online sellers tackle is reducing abandoned carts. Statistics show communicating with your customers after they’ve exited your store before checking out can reduce your abandoned cart rate by 58%, which equates to more than $156,000 for one company in a 30-day period. Whichever optimization techniques you choose, it’s important to remember that launching your store is just one step of many required to actually earn money with Shopify.

Try Dropshipping

No story about earning money with Shopify is complete without mentioning dropshipping. Dropshipping allows you to sell products without having the physical inventory yourself by outsourcing order fulfillment shipping. The global dropshipping market was estimated to be $111.28 billion in 2018. For sellers, dropshipping represents a significant pro because you don’t have to pay for inventory upfront or deal with the manual process of order fulfillment and shipping.

While there are many online commentators that make it seem like dropshipping is an easy way to get rich quickly, keep in mind that while this tactic does present some great advantages for online retailers it also requires dedication to optimize. You’ll still need to create a demand for your products and nurture customers through a sales cycle. 

Shopify Affiliate Program

You don’t need to have an online store to make money with Shopify. If you already have an audience, you can monetize them by becoming a Shopify affiliate. Shopify estimates you can earn approximately $58 for each user who signs up for a paid plan. This option could be a seamless fit for anyone who produces business or financial content that encourages others to start their own online stores. 

To sign up for the program, you’ll have to submit an application. If you get approved, Shopify will supply you with a unique referral link. Shopify will pay you bi-weekly via Paypal for any paid accounts you refer. You can incorporate this strategy with others that allow you to make money on YouTube, Instagram or other platforms to develop multiple income streams for your business. 

How Much Money Can You Earn With Shopify?

Keep in mind that starting a Shopify store is going to cost you money, so you’ll likely have to spend capital before you start making income using the platform. While Shopify does offer a free 14-day trial, after that they have three tiers of pricing options. 

• Basic Shopify: $25/month

• Shopify: $65/month

• Advanced Shopify: $399/month

You’ll also have to consider costs such as marketing for your store, photography of your products, and shipping. 

It’s hard to get a reliable estimate of how much money you can make with Shopify. The company doesn’t release statistics about average store revenue. While there are many internet bloggers and commentators who claim they make more than six figures a month using the platform, there are also many stores that don’t succeed. 

A smart way to estimate your potential earnings from Shopify is to use their Gross Profit Margin Calculator, which can help you determine the price of your products. After that, you’ll need to estimate how many products you can sell daily or monthly to come up with a rough idea of how much money you can earn using Shopify.

Making Money on Shopify vs. Amazon vs. Etsy

Shopify isn’t the only way to sell products online. There are a growing number of online marketplaces that give business owners the opportunity to sell their goods or services to the masses. Here’s how Shopify compares to Amazon and Etsy, two other popular platforms with slightly different purposes.

Keep in mind that one pivotal difference is that Shopify doesn’t function as a marketplace. While Amazon sellers will show up in the website’s search listings, as a Shopify seller you are primarily responsible for driving traffic to your site. This is similar to other platforms in the Shopify category, such as competitor Oberlo. 

Using Your Shopify Store as a Side Hustle

Shopify has firmly established itself as a viable way for online sellers to create stores that will turn a profit. But even though there are many Shopify success stories to draw from, keep in mind that launching a successful Shopify store takes dedication, and it’s not guaranteed to work. 

If you’re planning to use a Shopify store as your side hustle, make sure you do the hard, upfront work of budgeting your startup costs to know how much money you will have to make before your store is profitable. If you decide that Shopify isn’t the right path for you, remember that there are other ways to make money online. For example, some people with social media savvy are finding they can make money on TikTok, while other people prefer to use their freelancing skills to pick up digital odd jobs like social media management or content writing. 

Starting a side hustle can be not only a positive financial undertaking but also a chance to develop new skills, exercise your creativity, and explore potential future career pathways. If you’re interested in developing (or flexing) your online marketing and sales experience, using Shopify to launch a side hustle business could be a great option for you.

The post How to Make Money on Shopify appeared first on Good Financial Cents®.

Although registering under these designations requires certain fees and takes some legwork to understand which version is best for your situation, the potential tax benefits can be worth it. 

Here’s what to know about the differences between an LLC and an S-Corp and how to decide what’s best for you.

What Is an LLC?

Chances are you’ve seen the letters “LLC” before but aren’t totally sure what the acronym means. LLC stands for “Limited Liability Company.” It’s a business entity that functions like a hybrid between a sole proprietorshipand a sole proprietorship. 

Not all LLCs are created equal. Within the broad umbrella of LLCs, there are different types, such as:

• Single-Member LLC. This is an LLC with one owner who has the sole responsibility for taxes, debts, and business income.

• General Partnership. An LLC with multiple members is known as a general partnership; all owners take responsibility for debts, taxes, and business income.

• Family Limited Partnership. In this type, families own the partnership and can use it to manage assets such as property. 

The type of LLC and number of members in your organization can influence your taxes. For example, a domestic LLC with two members is classified as a partnership and viewed as a corporation for federal tax purposes. 

Forming an LLC

When it comes to membership in an LLC, laws vary by state. Some states, such as Colorado, Illinois, and Texas, don’t allow minors to form an LLC. Before getting started with creating an LLC, keep the following in mind:

• Fees. There are fees to form your LLC and fees involved in upkeeping your LLC. For example, in California, the filing fee for the articles of organization is $70. If your California-based LLC makes more than $250,000, you will have to pay a fee in proportion to your earnings.
  
  If you use a lawyer to help form the LLC and file the paperwork, you should also anticipate legal fees. 

• Forms. The forms you’ll need to create your LLC vary greatly by the type of organization you’re creating. At a minimum, you’ll need the articles of organization that describe the key information about your LLC, such as its name, the members’ names, and address.
  
  You might also need an operating agreement that describes the structure of your company. Even if your state doesn’t require this form, it’s best practice to have it.

• Taxes. LLCs will pay both state and federal taxes. For example, every LLC in California pays an annual $800 tax. At the federal level, an LLC will either be taxed as a partnership or corporation, depending on how you file. 

Why Choose an LLC?

Why use an LLC? People commonly choose LLCs when starting a new business for several reasons. Here are the advantages they see. 

• Limits Your Liability: Through an LLC, your assets are protected from the actions of the company. If your company starts accruing debts and creditors come calling, this could be a huge benefit of an LLC.

• Low Maintenance: An LLC doesn’t require many documents to start or maintain, so if you’re intimidated about starting a company or simply don’t have enough time, this could be a stress-free and low-cost option.

• Federal Tax Advantages: Profits from an LLC pass through the entity to members, which means you won’t be taxed on a corporate level but on your personal tax return instead.
  
  Losses also pass through to your personal tax returns, which can lower your personal tax liability. LLCs are a common strategy to help with freelancer tax advantages.

Tax Implications for an LLC

When it comes to an LLC’s tax advantages, it’s important to keep in mind that you’ll decide how your LLC is taxed by how you structure your LLC.

For example, a single-member LLC isn’t treated as a separate entity for tax purposes. If you have a single-member LLC, you’ll need to fill out Schedule C when you do your personal income taxes and carry the net income over to your personal tax return. 

If you have a multiple-member LLC, you can pay tax as a partnership. Again, the tax would pass through to the members depending on their involvement.

You could also choose to classify your LLC as a corporation or an S-Corp. This could be beneficial if your income is already high and you don’t want additional income passing through to you on your federal tax return. 

What Is an S-Corp?

An S-Corp is a corporation that passes all corporate income and losses to shareholders for federal taxes. Shareholders report the income and losses on their personal income taxes, which can influence the rate at which they are taxed.

The obvious benefit is that a shareholder of an S-Corp can avoid double taxation of corporate and individual income tax. 

An S-Corp is a tax status, so an entity could technically be an LLC and an S-Corp in some cases. Not all corporations can qualify for S-Corp status.

Here are the eligibility requirements:

• Be Domestically Incorporated

• Have Only Allowable Shareholders (Could Be Individuals, Trusts, Estates, or LLCs)

• Have a Maximum of 100 Shareholders

• Have Only One Class of Stock

• Not Be an Ineligible Corporation

Forming an S-Corp

If you’re thinking of forming an S-Corp, here are some of the finer details to keep in mind:

• Fees. When filing an S-Corp, you’ll have to consider state and federal filing fees, in addition to changes in operating costs such as insurance. 

• Forms. In addition to state forms, which vary, you’ll also have to file a federal Form 2553 to become an S-Corp.

• Taxes. S-Corps could be liable for federal income and employment tax. You can review the taxes that apply to your situation through the IRS website. You’ll also be subject to state taxes, which can vary by state. For example, California assesses S-Corps at 1.5% as well as a minimum $800 franchise tax.

Why Choose an S-Corp?

Business owners of bigger corporations have multiple options for organizing their entity, such as an S-Corp or a C-Corp.

For business owners who choose to go the S-Corp route, here are the benefits often cited:

• Tax Advantages. Profits and losses pass through to your personal tax returns, so you can get taxed at a lower rate and avoid double taxation. This could be particularly helpful if you’re in the start-up phase of your company and have many losses. 

• Protects Your Liability. Forming an S-Corp can help protect your personal assets if your company is sued or owes a debt. 

• Avoid Self-Employment Tax. While S-Corps must pay a reasonable salary to their employees, you could also classify some of your income from the S-Corp as a distribution, avoiding paying self-employment tax on your total earnings. 

Disadvantages of LLC vs. S-Corp

While there are benefits to both the LLC and S-Corp structures, there are also distinct disadvantages. Depending on your business goals, size, and operations, one might be more suitable than the other.

Let’s delve into some of the drawbacks of each structure to give you a more comprehensive view.

LLC Disadvantages

• Self-Employment Taxes: Profits that pass through to members of an LLC may be subject to self-employment taxes. This can potentially lead to higher overall taxes for the business owner compared to some benefits provided by S-Corps.

• Limited Growth Potential: As your business grows and you potentially look to raise funds, the LLC structure may not be the most attractive to investors compared to corporations.

• Varying State Rules: Each state has its own set of rules and fees for LLCs, which can create confusion for businesses operating in multiple states.

• Less Formal Structure: While this can be an advantage for some, others may find that the lack of structure can lead to disputes or misunderstandings among members.

S-Corp Disadvantages

• Strict Qualification Rules: There are restrictions on ownership for S-Corps, including a cap on the number of shareholders and who/what can be a shareholder. This can limit the potential for growth or investment opportunities.

• Salary Requirements: Owners who work in the business must pay themselves a “reasonable salary,” which could be higher than what they might otherwise take from the business.

• Paperwork and Formalities: S-Corps have stricter operational processes, including the requirement for a board of directors, regular shareholder meetings, and more. This can increase administrative burdens.

• State Tax Variations: Some states don’t recognize the S-Corp designation, meaning you might end up paying state taxes at the corporate level, reducing some of the federal tax advantages.

LLC vs. S-Corp: Side-By-Side Comparison

The Bottom Line – LLC or S-Corp: Which Should You Choose?

Deciding how to set up your business now is important as you continue to grow your company. Not only could it save you fees and headaches down the road, but the right entity could leave you with tax advantages that make an impact on your personal income. 

When making your choice, consider the cost of setting up each entity and the complexities of running them. You’ll want to weigh your immediate business needs against any plans for the future growth of your company. 

The post LLC vs. S-Corp — What’s the Difference and What’s Best for You appeared first on Good Financial Cents®.

A majority of Americans are abandoning resolutions of years past, and instead,  are focusing on more practical goals in today’s unpredictable world. One survey for Affirm found 62% of Americans are saving money for the future in 2024, while 54% want to budget better and 49% want to repay debt. 

What money goals do you want to set this year? Here are some top goals to prioritize that have a big impact on your financial picture moving forward.

1. Cut Expenses

A survey by McKinsey and Company found that four out of 10 Americans don’t expect their finances to rebound from the impact of COVID-19 until late 2022 or 2023. More people are looking at how to get by with less, and where to cut expenses. 

Reducing your expenses has obvious benefits. To have more money for tackling bigger financial goals, you’ll either need to earn more income or spend less money. Getting into the habit of regularly reviewing your expenses, and reducing spending, can help you stay on track.

Reducing expenses isn’t always easy. Whether it’s peer pressure, wanting to treat yourself, or paying for emergencies — expenses arise, and they can throw you off course. Here’s what you can do to make sure you stick to your goal:

• Cut Subscriptions: Get selective with your subscriptions, like entertainment streaming services (looking at you, Hulu, Disney+, and Netflix). Reduce subscriptions to 1-2 options per service type. 

• Set a Reminder: Put a reminder on your calendar for a set time every month where you’ll review your spending. This includes expenses, like subscriptions, groceries, and automatic refill orders, through sites, like Amazon Prime and Chewy. Adjust your budget, if necessary. 

• Get an App: Try budgeting tools, like Mint or You Need a Budget, which help you organize and track your custom budgets, send excessive spending alerts, and monitor subscription costs for more savings.

• Negotiate Bills: Review bills, like your car insurance or cell phone service. Contact your providers to see if they can offer discounts or rate reductions on your contract. If not, shop around with their competitors.

2. Start a Side Hustle

An Upwork and Freelancer’s Union survey estimated that approximately 57 million Americans freelanced either full- or part-time. Side hustles are the new norm. Whether it means taking advantage of the gig economy or starting your own small business, a side gig can bring in extra cash to transform your financial reality.

The extra money from starting a side hustle can help you attain otherwise out-of-reach financial goals. The added cash boost can go toward savings, big-ticket purchases, new investments, or repaying existing debt. 

Starting a side hustle can be daunting. Here are some ways to help you stay motivated throughout the process:

• Find a Support Network: Reach out to peers and mentors who’ve tried a similar side hustle, and stay in contact with them for accountability. They can also be a huge resource when brainstorming ways to navigate any challenges ahead. 

• Have a Monetary Goal in Mind: Decide how much money you want to earn from your side hustle (and what you’ll do with it). This can help you persist even when you’re tired or discouraged. 

• Schedule Time in Advance: Whether you’re planning to drive for Uber or launch an online store, set aside time to focus on it. It’s also helpful to keep this schedule consistent; for example, every Monday morning before your 9-to-5 job, or for two hours every evening. 

3. Save for Retirement

Half of American families have little or no money saved for retirement, a trend that worsened after the Great Recession, according to the Economic Policy Institute. Because many retirement savings techniques rely on the power of compound interest it’s smart to get started early. Plus, contributing to your retirement savings can provide a tax benefit. 

If you’re looking to give your retirement savings some love this year, here are some strategies to get started now and continue for the rest of the year:

• Take Advantage of Any Employer Match: Many employers provide matching retirement savings as a workplace benefit. Max out this employer match as your first priority when it comes to saving for retirement. If not, you’re just leaving money on the table. 

• Make Catch-up Contributions: If you’re age 50 or over and haven’t consistently contributed to your IRA or 401(k), you might be eligible to make additional contributions to give your savings added momentum. 

• Set Automatic Contributions: If you’ve found it hard to prioritize retirement savings in the past, setting up automatic contributions now can take a lot of the willpower out of the process. You should be able to do this through your bank, or even through your employer if you have a workplace plan.  

4. Rebalance Your Portfolio Regularly

In March 2020, Dow Jones plunged 26%, proving a personal finance axiom: the stock market is unpredictable. Although some investors prefer to time the market — gambling on its ever-changing highs and lows — others take the buy-and-hold approach. 

Even if you’re buying for the long term, you’ll want to regularly assess your portfolio to adapt to marketplace changes. Ensuring your investment mix is diversified can help you hedge against swings in the market. 

Not sure how to guide your finances through the ups and downs throughout the year? Here’s how you can stay consistent.

Hire an advisor: Taking a more active investment approach requires time commitment and confidence in your depth of knowledge. If you need help in this regard, consider getting an investment advisor. If you’re just getting started, online or robo-advisors, such as Wealthsimple or Robinhood, are good places to start.

Stay informed: Managing your investments means staying on top of market trends. Consider adding a stock ticker to your phone’s lock screen, and subscribing to investment newsletters and stock alerts. 

5. Refinance Debt

With interest rates at a near record low, it makes sense that refinancing debt is a New Year’s goal for many people. Refinancing can help you repay any existing debt faster. 

If you refinance at a lower rate than your original loans, you’ll pay less in interest over the life of the loan. You can redirect these savings toward your loan’s principal to get out of debt faster. You can refinance most types of debt, from your mortgage to student loans. 

Not only can refinancing shave time off the life of your loans, but if you consolidate at the same time it could simplify your finances. When you consolidate, you use the funds from your new loan to repay your existing debt. With the old debt paid off, you focus on making the one payment for your new loan each month.

Refinancing doesn’t have to feel daunting. Here’s how to get started:

• Shop Around: Compare refinancing rates and terms from a handful of lenders. 

• Consider fees: Some of your old debt could have a prepayment penalty. Factor this into the cost of refinancing — particularly, when it comes to refinancing your mortgage. You might find the penalties might negate the potential savings from refinancing.

• Repay Your Old Debt: Make sure your old debt is completely paid and that you’ve received documentation stating such. If you’re repaying credit cards or lines of credit, make sure to close these accounts after repaying them so you’re not tempted to incur more debt. 

6. Prepare for Emergencies

No matter how well you plan, emergencies are always bound to happen in life. Many American households don’t have enough cash on hand to replace even one month of lost income. If this is a concern for you, prioritizing your emergency planning could be a smart goal to achieve this year. 

Having the appropriate amount of emergency savings and insurance coverage can protect you and your family should a worst-case scenario occur. It can prevent you from going into debt, because of unexpected expenses and protect the future you’ve worked for. 

What should you prioritize when it comes to preparing for the unexpected?

• Emergency Savings: Your individual circumstances will dictate how large your emergency savings fund should be. Ideally, you’ll want enough savings to cover your expenses for about three months. Keep this money in an account with easy access, such as a high-interest savings account. 

• Insurance: When it comes to insurance, you’ll want to make sure you’re covered for health, home, auto, and life insurance. If you feel underinsured in any of these areas, find an insurer that offers a discount for purchasing multiple policies to reduce costs. Here’s a helpful list of top life insurance options.  

• Create a Will: Having a will and personal directive in place is essential for adults of all ages, even if you don’t have dependents or many assets. Creating a will helps settle your estate after you die — which can include your assets and your debt. A will can also determine decisions regarding your finances and health, if you become unable to do so yourself. 

Final Thoughts on 6 Financial Goals for the New Year

In the face of shifting priorities, many Americans are turning away from conventional New Year’s resolutions and embracing more pragmatic financial goals for 2024. A recent survey found that a majority of individuals are directing their attention towards securing their financial future (62%), improving their budgeting skills (54%), and reducing their debt burden (49%). These objectives have a substantial impact on one’s financial well-being in the ever-changing economic landscape. 

The goals encompass a range of strategies, from cutting expenses and starting side hustles to saving for retirement and rebalancing investment portfolios. Additionally, refinancing debt and preparing for unforeseen emergencies are becoming increasingly vital components of financial planning. By prioritizing these objectives, individuals aim to navigate the evolving financial terrain with greater resilience and stability.

The post 6 Financial Goals for the New Year appeared first on Good Financial Cents®.

Once you understand the basics of income taxes and are sure your tax return is correct, you can move on to deciding how to spend your refund. Most financial advisors recommend covering the basics first — like boosting your emergency fund, repaying debt, and saving for retirement. But what should you do if you already have those elements covered?

If you like the idea of using your earnings to get ahead in life, your refund — whether it’s a few hundred dollars or a few thousand — can go a long way toward giving you more financial freedom in the future.

There are so many ways to invest $1,000 or less (or more!). Here are some financially savvy ways to use your tax refund to help you reach your money goals.

1. Diversify Into Real Estate

Buying real estate isn’t always straightforward — especially if you’re a new investor. It can be a drawn-out process and results in owning a property that requires upkeep to earn a return on your investment. If you’re not ready for that step, a different way to invest in real estate is through buying into a Real Estate Investment Trust (REIT).

REITs let you diversify your portfolio, and because they’re listed on major stock exchanges, they’re easy to get into. You simply buy shares in them, similar to any other stock. This real estate investment option pays dividends, and they’re obligated to disperse a minimum of 90% of their taxable income to shareholders.

2. Update Your Home

Homeowners probably won’t be able to get a new roof or build a garage with their tax refund, but your refund can still add value to your property. 

Not only that but spending money on home maintenance could help you save on your budget throughout the rest of the year. For example, new windows or insulation can reduce your heating or cooling costs — data shows replacing your older windows with energy-efficient models can reduce your heating bill by 45%.

Another way to update your house and save money is by adding new security features, which can reduce your home insurance premium.

Just remember that sometimes, the flashiest home improvement projects have the lowest return on investment when it comes time to sell your home. If you’re truly trying to add value to your home to improve it for resale, talk to a real estate agent in your area to learn which features are likely to increase your home’s value in your neighborhood. These features could be different for every city in the country, so it’s important to talk to someone who has actual insight into what’s selling in your market. 

You can back up those insights by referring to Remodeling Magazine’s Cost vs. Value report, which is one of the country’s most extensive databases of home improvement projects compared to resale values. 

3. Upgrade Your Resume

You don’t have to rely solely on your investments to help you earn more. Earning a raise or getting a new job with higher pay is just as important — and you can put your tax refund to work to accomplish that. 

If you want to add a new skill to your toolbox or achieve a new designation that would qualify you for a different role, using your tax refund on educational opportunities is smart. 

Even free online courses statistically help job seekers improve their prospects. Seventy-two percent of survey respondents in a Harvard Business Review study reported job benefits from open enrollment classes. 

If you want to allocate some of your tax funds to improve your talents, consider both classes and networking opportunities (e.g., conferences). These help you become more legitimate in your field and establish crucial relationships for career advancement.

4. Buy Cryptocurrency

Cryptocurrencies like Bitcoin are one of the most buzzed-about topics in investment circles today, they’re created using digital codes on the blockchain. Consider them like electronic cash. Cryptocurrencies are volatile and, as such, have a massive potential for returns — but also for losses.

Investing in crypto is easier as the space has matured. Nowadays, you can buy some of the most popular currencies via an online exchange, such as Coinbase or Binance. You can buy cryptocurrencies using almost any other currency, including other cryptocurrencies. Similar to buying traditional cash, the exchange rate varies.

Not every exchange offers the same variety of altcoins, so if you want to invest in something other than Bitcoin, be prepared to evaluate less popular exchanges based on their safety. Also, every exchange charges fees, so compare the specific fee structures of your top exchanges before moving forward with your investment.

5. Peer-to-Peer Loans

Peer-to-peer lending, also referred to as “P2P investing”, is growing in popularity. This option is ideal for investors who are comfortable with more risk and are seeking potentially higher returns than safer investments, like the bond market. Popular peer-to-peer lender Prosper says its historical returns for investors are 5.7%.

With peer-to-peer lending, you use a platform to make an unsecured personal loan to another consumer. Depending on what platform you choose, there are several ways to loan your money. Typically, you choose between investing in either whole loans or fractional loans, and you can choose a variety of different risk levels.

Loans to people with lower credit are riskier but could have a higher return. 

To get started, apply for an investing account on your platform of choice. Then, fund your account before choosing which loan requests to approve.

6. Invest in Non-Fungible Tokens

Cryptocurrency isn’t the only digital asset in town. If you’re looking for a creative way to invest your tax refund, consider buying non-fungible tokens (NFTs). Like cryptocurrencies, NFTs are traded on the blockchain. 

However, it’s not a currency; it’s a digital asset that represents both physical and digital purchases, like digital artwork. They’re not interchangeable; they’re each unique. Think of an NFT like a rare baseball card, just one that you can’t counterfeit. 

NFTs became popular in the gaming world because they allowed gamers to amass collections of digital items that are useful in their games. They can even help users monetize their gameplay in some instances.

It’s not new to many investors, but it’s gaining legitimacy and popularity. For example, on February 25, 2021, Christie’s became the first-ever auction house to sell digital artwork via NFTs. You can make money on NFTs by purchasing and reselling them, although you might have to wait long-term for your investment to increase in value. 

It’s easy to get started buying NFTs; for example, you can buy NFTs on the WAX blockchain by creating a WAX Cloud Wallet (WCW) using your social media profile. Or, you could use a platform like Top Shot, which accepts United States dollars, or OpenSea, which accepts cryptocurrencies. 

Is Your Tax Refund Too Large?

Common sense says there’s no such thing as too much money. However, common sense isn’t always spot on, especially when the subject is taxation.

Getting a huge refund means the government has been holding on to a lot of your money all year. That’s OK if you enjoy the windfall of a refund every winter or early spring.

But if you’d rather have the freedom to use your own money the way you want all year, consider changing your withholdings at work or as you’re doing your own taxes if you’re self-employed. Your human resources department can help. 

For example, you could be investing your income all year and earning interest. In contrast, Uncle Sam doesn’t pay interest on your money when the IRS holds onto it until refund time.

The opposite can also be true: If the government didn’t withhold enough of your income, you could have a tax bill this year instead of a refund. Access your budget throughout the year and see whether adjusting your income tax withholdings is more advantageous than a lump sum tax refund.

The Bottom Line – 6 Unexpected Ways to Invest Your Tax Refund

In exploring various avenues for utilizing a tax refund, it’s evident that opportunities abound. Whether you’re looking to dip your toes into the realm of real estate with REITs, bolster your home’s value, advance your career, or delve into the digital age of investments with cryptocurrencies and NFTs, there’s a pathway tailored for every financial aspiration.

Even traditional peer-to-peer lending offers a way to grow one’s refund. However, it’s vital to reassess if a large refund is in your best interest. Rather than letting the government hold onto your funds, adjusting your withholdings could offer year-round financial flexibility and potential growth.

The post 6 Unexpected Ways to Invest Your Tax Refund appeared first on Good Financial Cents®.

If you want to invest in oil, it’s important to do your research and find a method of investing that matches your risk tolerance. Here’s what to know about investing in oil and how to decide if this is the right investment vehicle for you. 

What Is the Oil Market?

The oil market carries a rich history, intertwined with geopolitical and economic fluctuations. Oil, as a predominant energy source, has fueled global industries, influencing economic cycles. Its market landscape is painted with periods of booms, busts, and groundbreaking innovations, reflective of technological advancements and global demand shifts.

Investors eyeing the oil sector must navigate its volatility, often swayed by political decisions, environmental considerations, and technological disruptions. The understanding of the oil market’s historical background, punctuated by OPEC’s strategies, market speculations, and environmental regulations, remains crucial for informed investment strategies, facilitating meaningful participation in its diverse investment avenues.

Why Invest in Oil?

Oil can be a volatile stock which is one of its disadvantages that scares some investors off. However, it has many upsides, too. 

Oil allows you to diversify your portfolio, which is highly recommended when creating a long-term investment strategy. Many oil stocks also pay dividends. For example, in the current quarter of 2023, Chevron stock yielded a dividend of $4.14 per share. 

Then, there’s the potential for tax write-offs. Oil investments present unique tax advantages in the United States. Through tax exemptions and offsets, oil investors can avoid taxes they’d otherwise have to pay if they invested in alternative industries. 

Despite this, oil isn’t the right investment for everyone. The volatile prices, high risk, environmental impact, and relatively high financial barrier to entry are some drawbacks to consider before jumping into an oil investment. 

Factors to Consider Before Investing

Investing in oil is a multifaceted decision that requires thoughtful consideration of various factors.

• Volatility Awareness: Understand that oil prices are highly volatile and can significantly affect the potential returns on investments.

• Diversification: Consider diversifying investment strategies. Options include Master Limited Partnerships (MLPs), Exchange-Traded Funds (ETFs), Oil Futures, Direct Participation Programs (DPPs), and mutual funds related to oil or natural resources.

• Tax Advantages: Explore and utilize the unique tax benefits that often accompany oil investments, such as exemptions and offsets.

• Risk Tolerance: Carefully evaluate personal risk tolerance levels, ensuring that the selected investment method aligns with individual financial objectives and capabilities.

• Market and Geopolitical Analysis: Continuously monitor market trends, global events, and geopolitical shifts that might impact the oil industry and consequently, investment decisions.

• Environmental Considerations: Weigh the ecological impacts of investing in oil, as these factors can influence long-term investment sustainability and market perceptions.

How to Invest in Oil

There are several ways to get started investing in oil. When you’re evaluating your options, be sure to assess the risk level of each, to make sure it matches your own risk tolerance. Also, if you have any specific tax needs you’ll want to consider the tax advantages of certain investments and whether these can benefit you. 

Master Limited Partnerships (MLPs)

MLPs, which are most often found in the energy industry, are entities that will typically provide or oversee the supplies, materials, or staff needed for other businesses in the energy industry to operate. 

Think of companies that provide services to the oilfield, transport pipelines, or help oil companies coordinate their operations. They’re structured as partnerships, not corporations, for tax purposes. This means they pay tax at what’s often a much lower rate.

MLPs are relatively low-risk, making them a popular choice for those who take a long-term approach to investing, or for estate planning purposes. 

Exchange-Traded Funds (ETFs)

Want to diversify your portfolio by adding oil, but aren’t prepared to buy oil itself? ETFs offer an alternative, and potentially less costly, method to integrate oil into your investment strategy. Since ETFs are essentially pre-packaged, you don’t have to make multiple purchases in oil stocks to round out your oil exposure. 

You can trade ETFs just like you would any stock in your portfolio, so you don’t need a broker-dealer to help. This gives you greater control and makes overseeing your own portfolio easier. Plus, with oil ETFs, you don’t incur capital gains tax until the fund is sold. 

Think you want to add oil ETFs to your portfolio? Conduct thorough research first by paying attention to the price of oil. Target specific ETFs and note their behavior as oil rises and falls. When you have an understanding of how each ETF you’re looking at reacts to marketplace changes, you can make your oil purchase based on your projections.

Oil Futures

Oil futures might be a good fit if you want an investment that’s more directly in line with the crude oil market. Futures are a type of financial contract that stipulates a transaction will take place at a set time, and date and for a certain price. You can buy futures in many industries, including oil. When it comes to crude oil futures, the contracts specify how much crude oil will be sold on a certain date and at what price.

Futures contracts cover 1,000 barrels at a time. When you take part in purchasing futures, it’s not expected that you’re going to one day be the owner of a barrel of oil. You purchase futures through a commodities exchange, selling before the expiration date on the contract. 

Even a small change in oil prices can have a relatively big impact on your payout — if oil is at $45 a barrel and rises to $46 when you sell, that’s a $1,000 increase for just one futures contract.

Keep in mind, that you’ll need a margins account to trade futures. Usually, your margin account needs a minimum balance so that you can pay any losses you might incur at the close of the contract. 

Direct Participation Program (DPP)

If you want to make a direct investment into activities like the exploration of oil you might want to consider a Direct Participation Program. These are long-term, pooled investments that rely on passive management, meaning they aren’t traded. 

With a DPP, all of the members contribute their funds to be invested by the general partner. Whereas funding an exploratory drilling program might otherwise be only available to wealthy individuals, participating in a DPP lets investors — who otherwise wouldn’t have access to a lot of capital — participate with full exposure to the risk or reward. 

In oil, there are several types of DPPs:

• Exploratory drilling program

• Developmental drilling program

• Working interest program

• Rework program

Since DPPs are often incorporated as partnerships they enjoy tax benefits over corporations. However, DPPs aren’t publicly traded. This means you can’t simply purchase a position in one like you would when buying a stock. 

You might also have to meet a certain income level or have a certain amount of assets to invest. Depending on the state, you might even need to be an accredited investor to participate in a DPP. This is because DPPs are not a liquid investment. Once you invest your money in a DPP, you’ll need to be prepared to leave it there for five to 10 years. 

Mutual Funds

Mutual funds take investments from many investors and use the collective total to secure assets, like stocks and bonds, related to the theme of the fund. They’re managed by professional mutual fund managers who research the market, and then either aggressively try to beat it or make safe investments that keep pace with the overall market. 

Although it can be hard to diversify your portfolio by yourself, especially if you have limited money to work with, participating in a mutual fund can help you achieve diversification. 

When it comes to oil, there aren’t specific oil mutual funds to invest in. Investors typically participate in mutual funds related to oil, such as energy funds or natural resource funds. By choosing the most appropriate funds in these industries, you’ll get some exposure to oil.

Monitoring and Adjusting Your Oil Investments

To maximize returns and mitigate risks in the oil sector, active investment monitoring and timely adjustments are crucial. With the industry’s inherent volatility, it’s vital to stay updated on global events, geopolitical tensions, and technological advancements that influence oil prices. Regularly review the performance of your selected investment vehicles, be it MLPs, ETFs, or DPPs.

This way, you can reallocate assets or diversify further, ensuring alignment with your financial goals and risk appetite. Additionally, consult financial advisors to gain insights into market projections. Remember, proactive management can transform potential pitfalls into profit-making opportunities in the ever-evolving oil market.

The Bottom Line: Investing in Oil

Investing in oil requires careful consideration of its volatility and a well-researched approach. Options include MLPs, ETFs, Futures, DPPs, and Mutual Funds, each offering unique risks and benefits. Essential factors include market awareness, geopolitical analysis, and an understanding of environmental impacts.

Continuous monitoring and strategic adjustments are crucial for navigating the dynamic oil market, maximizing returns, and aligning investments with individual financial objectives and risk tolerance. Remember to consider tax advantages and diversification benefits to make informed and profitable investment decisions.

The post How to Invest in Oil appeared first on Good Financial Cents®.

If you’re considering making an Offer in Compromise, you’ll need to know what it means and how to proceed. Here’s everything you need to know to determine if this strategy is right for you.  

What Is an Offer in Compromise?

An Offer in Compromise is an agreement you make with the IRS to settle your tax debt for less than the full amount. It’s used in cases where taxpayers would experience significant financial hardship if they paid the full tax amount that’s owed. 

Qualifying for an Offer in Compromise isn’t easy. The IRS will assess not only your ability to pay the debt but also your income, expenses, and any equity you have in your assets. If it approves your offer, there are two different payment options (monthly or lump sum) available to help you customize your repayment schedule to your needs. 

Offer in Compromise Eligibility

Here’s what the IRS looks for to determine eligibility for an Offer in Compromise: 

• You can’t be in an open bankruptcy proceeding.

• You have to be caught up on filing all of your federal tax returns. 

• You need to have made all of your required estimated tax payments. 

• You’ve submitted all federal tax deposits for any employees. 

Once you’ve met the basic criteria for eligibility, the IRS will review your offer. It typically approves offers where the amount you’ve suggested is more or less the maximum it could collect from you in what it determines to be a “reasonable” amount of time. 

How to Submit an Offer in Compromise

Submitting an Offer in Compromise can be complicated so many people prefer to use a tax relief company to help. If you go that route, be sure to compare the best tax relief companies online before choosing one. Review each company to ensure it has a good track record, excellent customer service, and low tax relief service costs. 

Although you can go through a tax relief company to submit an Offer in Compromise on your behalf, you can choose to submit your Offer in Compromise on your own which can save you money. Here are the basic steps to preparing an Offer in Compromise for the IRS. 

Step 1: Gather Important Documents

You’ll need to provide personal details to complete your Offer in Compromise. First, make sure you have documents that show your total financial situation. You’ll want to have all aspects of your finances documented, such as cash, investments and assets, available credit, debt, and your income. 

Also, if there are others in your household who contribute to expenses you’ll need to provide information about their income and average expenses.

Step 2: Complete Form 433-A (OIC) or 433-B (OIC)

Form 433-A (OIC) is for wage earners and those who are self-employed. This form helps the IRS calculate what it believes is an appropriate offer based on your income, expenses, and earning potential. Keep in mind, if you’re married, but living separately, your spouse will also have to file the same form. 

Form 433-B (OIC) is necessary to fill out if you own a business or corporation, or you’re a single-member LLC, taxed as a corporation. 

Step 3: Attach Supporting Documents

You’re not limited to only the information on the form, you can also attach additional documentation that shows your financial circumstances. Each form has a list of the specific documents you need to attach for support. 

For example, with Form 433-A (OIC) some of the supporting documents you need to attach are copies of:

• Current pay stubs or earning statements;

• Individual bank statements from the last three months; and

• Statements for each investment or retirement account you have 

Step 4: Complete Form 656, Offer in Compromise

In IRS Form 656, you’ll decide which tax years, and the type of tax, you’re going to offer a compromise for. You’ll also need to state the amount and how you’ll make payments. 

Step 5: Include Payment

There are two separate payments you’ll need to make with your offer — the application fee, which is $205, and your initial payment. 

Your initial payment depends on which repayment method you’re choosing. If you’re opting for monthly payments, then you’ll need to send the first month’s amount. If you’re opting for lump sum payments, you’ll need to send 20% of the total amount. If your offer is rejected, this initial payment will be applied to your tax debt. 

You can send both payments by personal check, cashier’s check, or money order, or through the Electronic Federal Tax Payment System. You should make them payable to the “United States Treasury.” 

There’s only one scenario when you don’t have to send any funds with your application  — that’s if you qualify for Low-Income Certification. In this case, your application fee is waived and you don’t need to send your initial payment. 

Step 6: Mail Your Application

Before you drop your application in the mail, be sure to make a copy of the entire package to keep for your records. It’s a good idea to send any sensitive documents, like an Offer in Compromise, via certified mail so that you can track the offer and retain proof of delivery.

What Happens When Your Offer Is Approved

If your Offer in Compromise is approved, you’ll have to continue to file taxes and keep up with estimated payments that are due in the future. An approved Offer in Compromise doesn’t give you any tax immunity on future earnings, it simply helps you resolve tax debt from past earnings. 

After receiving written confirmation that your offer is approved, you’ll need to review the Offer Terms, which will be listed in Section 7 of Form 656. Then, you can start making payments. 

If you opted for a lump-sum payment, you’ll have already submitted 20% of your total payment with your initial offer. After that offer is approved, you’ll need to pay the remaining balance in a maximum of five payments. 

What to Do If Your Offer Is Denied

Not every Offer in Compromise is accepted by the IRS. If yours is denied, you still have options. 

Here’s what to try next:

• You have 30 days to appeal your rejection, which you can do using Form 13711.

• Set up an installment agreement with the IRS that allows you to make monthly payments throughout a set term. This can stop any collection activity against you by the IRS. 

• Apply for a payment extension using Form 1127.

• Request “Currently Not Collectible” status, which could temporarily defer your tax bill until your finances improve.   

In addition to these strategies, you can also work to improve your finances to make it easier to repay your tax debt. If you don’t already have a budget, create one that includes debt payments. 

Once you’ve cut expenses and directed those funds toward repaying your tax debt, consider also increasing your income to help you tackle your debt faster. 

Even though paying your total tax bill might seem daunting, remember that it’s possible to fix financial problems — you won’t stay stuck forever. The key is determining the right plan for you and then staying consistent as you work toward your goals. 

The post 6 Steps to Submit an Offer in Compromise for Tax Debt appeared first on Good Financial Cents®.

Its popularity has been noted at the highest levels of government, with President Trump threatening to ban the platform in the U.S. due to what Trump’s lawyers cited as national security considerations. 

As more attention is focused on the platform, it’s natural to wonder — can content creators make money on TikTok? If you’re growing a TikTok following and curious about monetizing your audience, here’s what you need to know. 

Why Making Money on TikTok Is Getting Easier 

Monetizing your TikTok wasn’t always the norm. In the early days of TikTok, there were few branded posts. As an increasing number of brands have entered the space, selling opportunities for sponsored content on social platforms is becoming easier for creators.

The amount of money you can earn on TikTok varies, but just like any social media platform, if your content goes viral it could be lucrative.

It’s also actively making it easier for viewers to monetize their audience without the help of brand partnerships. With TikTok’s integration with Teespring, announced in late August 2020, creators can now sell merchandise directly to their fans. 

As TikTok’s popularity continues to establish itself, more brands are flocking to the app, bringing with them opportunities to make some serious cash for creators who can establish TikTok followings. 

How to Monetize Your TikTok 

Monetizing your TikTok is one of the newest ways to make money online. Here are some of your options. 

Audio Sponsorships 

TikTok is a platform that emphasizes audio, with songs and audio clips often going viral on the platform — take Lil Nas X’s Billboard 100 hit “Old Town Road” as a prime example. 

Artists attempting to replicate Lil Nas X’s path to success have started to pay TikTok influencers to include their audio in posts. Creator Skylar Krupa, who posts videos of his grandparents, has used this method to monetize his growing audience. He charges a rate of $25 per 25,000 followers. 

There’s no formal way to arrange audio sponsorships, so teens who want to monetize their following this way, or even grandparents from the example above, have to reach out to artists directly or through artist management teams. 

Product Sales 

Creators who want to monetize their audiences directly, without relying on a brand’s advertising dollars, can turn to selling merchandise and products to their audience.

TikTok’s partnership with Teespring means creators can sell merchandise directly in the app. The integration allows TikTok creators to customize a design from 180 different products. 

To test the integration, TikTok and Teespring launched with an initial cohort of 7,000 creators in September 2020. They’re expected to announce how additional creators can start utilizing the integration. 

Creators can also add links in their bio to a personal website or alternate merchandise platform where fans can purchase products. For example, TikTok user, @thedottist, has a trackable link to purchase her artwork directly embedded in her bio. 

Promote a Business or Brand

Audio sponsorships aren’t the only way to make money with branded content on TikTok. Creators can also leverage their videos to help brands or businesses launch and promote products. 

One of the early examples of influencer marketing on TikTok was Mucinex, the cold and flu medicine. Mucinex worked with creators to promote its products during the cold and flu season.

The brand launched a challenge called #BeatTheZombieFunk and TikTok influencers, such as the brother-sister duo OurFire, participated. 

Creators who want to get started with brand sponsorships and don’t have representation can reach out to brands and businesses themselves or find opportunities through TikTok’s official Creator Marketplace. 

Get Paid by TikTok

TikTok wants to help its biggest creators succeed and earn money solely through the platform. In pursuit of this ambition, it’s launched a $200 million creator’s fund, with hopes to grow it to $1 billion by 2023. Through this program, TikTok will pay creators directly for making videos. 

TikTok has been vague about how much creators can earn and how many creators will receive funding, including information about the minimum number of followers needed to qualify.

Some TikTok experts have said you need at least 10,000 followers and 10,000 views on your profile within the last 30 days, but this hasn’t been confirmed by the platform. 

Creators can apply through their TikTok profile. In the notifications section of your messages, you’ll get an invitation to apply directly from TikTok if you meet their minimum requirements. 

Convert Gifts to Diamonds

A popular way of earning money on TikTok is for creators to host live streams where their fans send them gifts, purchased with virtual coins that are bought within the platform. Creators can then convert these gifts into “diamonds” (TikTok’s virtual credits) which can be cashed out. 

In order to purchase coins, fans must be at least 18 years old. 

Creators who are 18 years old or over can withdraw diamonds for a cash value decided by TikTok at any time. Payment is made to a PayPal account of the creator’s choosing. TikTok imposes daily limits on withdrawals, which are displayed during your withdrawal process. 

How Much Money Can You Earn on TikTok 

The amount of money you can earn on TikTok varies, but just like any social media platform, if your content goes viral it could be lucrative. There aren’t any third-party sources yet that have objectively quantified how much money TikTok creators are making. 

Even popular creators, like Ryan Shakes, who’s been wildly successful, don’t release their earnings. Instead, we can estimate how much money you can make on TikTok by piecing together anecdotal evidence.

For example, London-based economist Tom Hartmann estimated in a Medium article that TikTok creators with 100,000 followers earn about $500 to $2,000 for sponsored videos.

Doing the math, that could mean that top TikTok creators make somewhere between $50,000 and $150,000 for sponsored posts. 

Another way to estimate earnings is by reviewing figures released by marketing agencies. TalentX Entertainment, an influencer agency, estimates they charge brands between $0.01 to $0.02 per video view on TikTok. 

Then there’s TikTok’s creator’s fund — which they hope will encourage creators to make content full-time through the platform. It hasn’t released any information on what a full-time income might look like, but the idea is that it’d be substantial enough that creators don’t have to work other jobs. 

Making Money on TikTok vs Instagram and YouTube 

YouTube pays creators a sum based on advertising dollars made by the platform from creator videos.

TikTok, however, doesn’t have a specific equation for how creators are paid, making it more like Instagram. TikTok and Instagram allow creators to get paid by brands for creating sponsored content. 

For some creators, this could create a barrier to getting paid — you need to establish a relationship with brands and convince them your content is worth their money.

If you need to make money fast, the process of monetizing your following by establishing an audience and connecting with brands might take too long for you. 

Other creators feel this strategy opens doors, as it allows them to eventually maximize earnings with any businesses that are interested. 

Using TikTok as a Side Hustle 

TikTok is gaining popularity and will continue to have more lucrative monetization opportunities as the app evolves. If you’re willing to put in the work to build your audience you could end up reaping financial rewards. BLOG

This platform might be best for creative people who want to earn money on social media without investing the time and high production value that platforms, like YouTube and Instagram, typically require.

That said, to succeed on TikTok, you’ll need a solid understanding of the platform’s nuances and its culture, which can also be a major time investment. 

Want to learn about other ways to make money?

The Bottom Line – How to Make Money on TikTok

The meteoric rise of TikTok has opened new avenues for monetization, offering a plethora of opportunities for content creators.

As brands increasingly recognize the platform’s influence, opportunities for sponsored content are on the rise.

Whether through audio sponsorships, direct product sales, promoting a business, or benefiting from TikTok’s creator’s fund, there’s potential for significant earnings.

However, as with all platforms, success requires dedication and a deep understanding of the app’s culture and nuances.

TikTok’s less demanding production values, when compared to YouTube or Instagram, make it a viable side hustle for those willing to invest time in understanding and growing their presence on the platform.

The post How to Make Money on TikTok appeared first on Good Financial Cents®.

This holds true, according to historical data from the Federal Reserve Bank of St. Louis. It found that during the 2007 recession, loan growth at traditional banks decreased and remained deflated over the next four years. 

Credit can be a powerful tool to help you make ends meet and keep moving forward financially. Here’s what you can do if you’re struggling to access credit during a weak economy.

How Does a Financial Downturn Affect Lending?

Giving someone a loan or approving them for a credit card carries a certain amount of risk for a lender. After all, there’s a chance you could stop making payments and the lender could lose all the funds you borrowed, especially with unsecured loans. 

For lenders, this concept is called, “delinquency”. They’re constantly trying to get their delinquency rate lower; in a booming economy, the delinquency rate at commercial banks is usually under 2%. 

Lending becomes riskier in a weak economy. There are all sorts of reasons a person might stop paying their loan or credit card bills. You might lose your job, or unexpected medical bills might demand more of your budget.

Because lenders know the chances of anyone becoming delinquent are much higher in a weak economy, they tend to restrict their lending criteria so they’re only serving the lowest-risk borrowers. That can leave people with poor credit in a tough financial position.

Before approving you for a loan, lenders typically look at criteria such as:

• Income Stability

• Debt-To-Income Ratio

• Credit Score

• Co-signers, if Applicable

• Down Payment Size (For Loans, Like a Mortgage)

Does this mean you’re completely out of luck if you have bad credit? Not necessarily, but you might need to take the time to understand all of your alternatives.

5 Ways to Help Get Your Credit Application Approved 

Although every lender has different approval criteria, these strategies speak to typical commonalities across most lenders.

1. Pay Off Debt 

Paying off some of your debt might feel bold, but it can be helpful when it comes to an application for credit. Repaying your debt reduces your debt-to-income ratio, typically an important metric lenders look at for loans such as a mortgage.

Also, paying off debt could help improve your credit utilization ratio, which is a measure of how much available credit you’re currently using right now. If you’re using most of the credit that’s available to you, that could indicate you don’t have enough cash on hand. 

Not sure what debt-to-income ratio to aim for? The Consumer Financial Protection Bureau suggests keeping yours no higher than 43%. 

2. Find a Cosigner

For those with poor credit, a trusted cosigner can make the difference between getting approved for credit or starting back at square one. 

When someone cosigns for your loan they’ll need to provide information on their income, employment and credit score — as if they were applying for the loan on their own. Ideally, their credit score and income should be higher than yours.

This gives your lender enough confidence to write the loan knowing that, if you can’t make your payments, your cosigner is liable for the bill. 

Since your cosigner is legally responsible for your debt, their credit is negatively impacted if you stop making payments. For this reason, many people are wary of cosigning.

In a recession, it might be difficult to find someone with enough financial stability to cosign for you. If you go this route, have a candid conversation with your prospective cosigner in advance about expectations in the worst-case scenario. 

3. Raise Your Credit Score 

If your credit score just isn’t high enough to qualify for conventional credit you could take some time to focus on improving it. Raising your credit score might sound daunting, but it’s definitely possible. 

Here are some strategies you can pursue:

• Report Your Rent Payments: Rent payments aren’t typically included as part of the equation when calculating your credit score, but they can be.
  
  Some companies, like Rental Kharma, will report your timely rent payments to credit reporting agencies. Showing a history of positive payments can help improve your credit score. 

• Make Sure Your Credit Report Is Updated: It’s not uncommon for your credit report to have mistakes in it that can artificially deflate your credit score.
  
  Request a free copy of your credit report every year, which you can do online through Experian Free Credit Report. If you find inaccuracies, disputing them could help improve your credit score. 

• Bring All of Your Payments Current: If you’ve fallen behind on any payments, bringing everything current is an important part of improving your credit score. If your lender or credit card company is reporting late payments a long history of this can damage your credit score.
  
  When possible speak to your creditor to work out a solution, before you anticipate being late on a payment.

• Use a Credit Repair Agency: If tackling your credit score is overwhelming you could opt to work with a reputable credit repair agency to help you get back on track.
  
  Be sure to compare credit repair agencies before moving forward with one. Companies that offer a free consultation and have a strong track record are ideal to work with.

4. Find an Online Lender or Credit Union

Although traditional banks can be strict with their lending policies, some smaller lenders or credit unions offer some flexibility. For example, credit unions are authorized to provide Payday Loan Alternatives (PALs).

These are small-dollar, short-term loans available to borrowers who’ve been a member of qualifying credit unions for at least a month.

Some online lenders might also have more relaxed criteria for writing loans in a weak economy. However, you should remember that if you have bad credit you’re likely considered a riskier applicant, which means a higher interest rate.

Before signing for a line of credit, compare several lenders on the basis of your quoted APR — which includes any fees like an origination fee, your loan’s term, and any additional fees, such as late fees. 

5. Increase Your Down Payment

If you’re trying to apply for a mortgage or auto loan, increasing your down payment could help if you’re having a tough time getting approved. 

When you increase your down payment, you essentially decrease the size of your loan, and lower the lender’s risk.

If you don’t have enough cash on hand to increase your down payment, this might mean opting for a less expensive car or home so that the lump sum down payment that you have covers a greater proportion of the purchase cost. 

Loans vs Credit Cards: Differences in Credit Approval

Not all types of credit are created equal. Personal loans are considered installment credit and are repaid in fixed payments over a set period of time. Credit cards are considered revolving credit, you can keep borrowing to your approved limit as long as you make your minimum payments. 

When it comes to credit approvals, one benefit loans have over credit cards is that you might be able to get a secured loan. A secured loan means the lender has some piece of collateral they can recover from you should you stop making payments. 

The collateral could be your home, car or other valuable asset, like jewelry or equipment. Having that security might give the lender more flexibility in some situations because they know that, in the worst case scenario, they could sell the collateral item to recover their loss. 

The Bottom Line

Borrowing during a financial downturn can be difficult and it might not always be the answer to your situation. Adding to your debt load in a weak economy is a risk.

For example, you could unexpectedly lose your job and not be able to pay your bills. Having an added monthly debt payment in your budget can add another challenge to your financial situation.

However, if you can afford to borrow funds during an economic recession, reduced interest rates in these situations can lessen the overall cost of borrowing.

These tips can help tidy your finances so you’re a more attractive borrower to lenders. There’s no guarantee your application will be accepted, but improving your finances now gives you a greater borrowing advantage in the future.

The post How to Get Approved for Credit in a Financial Downturn appeared first on Good Financial Cents®.

• Key Takeaways:
• – Clear timeline for the tax relief process
• – Fully remote appointments available
• – Offers a suite of services including tax preparation and consultation
• – Client bill of rights sets clear expectations

Learn More

For the many Americans who owe a tax debt to the federal or state government, even just thinking about filing a return or sorting out how to pay their taxes can take an emotional toll.

IRS numbers show that in 2022 there were 98.4 billion in unpaid assessments which includes unpaid taxes and accrued penalties and interest.

Knowing how much tax you owe — and how to pay that debt — can be overwhelming, which is why many people turn to tax relief services when trying to get out of tax debt. 

Since there are so many tax relief services in operation, it’s important to carefully review candidates before moving forward with any company. If you’ve been considering Optima Tax Relief, here’s what you need to know. 

About Optima Tax Relief

Like many of its competitors, Optima Tax Relief offers tax negotiation and settlement services in addition to tax preparation. They’re experienced in IRS audit defense and committed to a smooth, honest client experience.

Optima Tax Relief takes its free consultation a step further than competitors by involving tax specialists and chartered accountants who create a clear, transparent plan so you know what to expect upfront.

Optima Tax Relief Services

Optima Tax Relief can help you negotiate or resolve a tax debt, and offer other services to explore.

Tax Consultation

Optima Tax Relief offers a free tax consultation to people who are experiencing difficulties with their tax situation. For example, if you’re potentially facing wage garnishment from the IRS. The goal of tax consultation is to provide you with a road map to solve your tax problems.

Optima draws on its team of attorneys, enrolled agents, and chartered accountants to review your plan. 

During your consultation, you’ll discuss topics such as removing tax liens, ending wage garnishment, tax planning, initiating an installment plan, or even helping with tax preparation.

You can use the information from your discussion to move forward with resolving your tax issues on your own, with a different service, or with Optima Tax Relief. 

To get started, you can call Optima Tax Relief at 800-536-0734 or you can fill out their online form. You’ll need to answer questions such as how much tax debt you’re in, how you earn your income, how many years of unfiled taxes you have, and what state you live in.  

Tax Protection Plan

Optima’s tax protection plan is a multi-tiered service that combines IRS protection with tax preparation and identity theft monitoring. 

All tiers of the service offer what Optima calls “IRS protection.” What it includes as part of this service is monitoring IRS collections and balances, and performing a tax withholding analysis.

If you need help with a tax resolution, you’ll also qualify for lower fees if you’re a subscriber to its protection plan. 

The tax preparation component is where the basic, standard, and professional plans separate themselves. In the Basic Plan, you’ll have to prepare your taxes on your own, but you’ll have access to Optima’s software. You can use the software for one return annually.

For additional returns, you’ll have to pay another fee. Note, if you’re just planning to use the product for their tax software, be sure to compare it against top tax software competitors first.  

With the Standard Plan, Optima will file your taxes if you’re a wage earner. It also offers a $10,000 preparation guarantee. If you’re an independent contractor, you’ll need to get the Professional Plan. In this tier, Optima will also help you determine your estimated quarterly payment amounts. 

Each tier also comes with a level of ongoing ID theft protection, with the Standard and Professional plans offering credit monitoring. 

Tax Resolution

Tax resolution is where Optima’s expertise truly rests. They’re equipped to help with many tax resolution scenarios.

Here are just a few of the areas they are equipped to help clients in:

• Audit Representation

• Levy Release

• Innocent Spouse Relief

• Offer in Compromise

• Tax Lien Removal

• State Tax Issues

To get started with Optima Tax Relief, you’ll complete your initial consultation. Then, you’ll enter phase one, the “Investigation Stage” which lasts about two to four weeks. During this step, they’ll make contact with the IRS and review your options.

After that, you’ll enter the “Resolution Stage” which takes about three to nine months. After the resolution, you’ll have established IRS compliance. 

Once you’re a client with Optima, you’ll have access to an online client portal so all of the work you’re doing with your representative stays organized. 

Unique Features

There are many tax relief services on the market today — here’s what makes Optima Tax Relief stand out. 

• Highly Transparent: Optima Tax Relief is upfront about each stage of the tax relief process, the work they’ll do on your behalf, and how long they expect this to take. 

• A+ Better Business Bureau Rating: Optima Tax Relief has an A+ rating with the BBB and they have been accredited since 2012.

• Protection Plan: Not all tax relief services offer ongoing IRS protection and identity theft protection or credit monitoring. 

• Client Bill of Rights: Optima Tax Relief has established its own client bill of rights that includes rights such as clear expectations, straight talk, and innovative, smooth client experience. 

When to Use Optima Tax Relief

Even though you can technically pursue tax relief by yourself, the tax code can be complicated to decipher. It’s easy to make mistakes when it comes to your taxes and it can be hard to fix problems that occur. That’s where tax relief companies come in, and some are more genuine than others. 

Tax relief companies know you’re probably desperate when you’re coming to them for help, and sometimes they can take advantage of that. What’s positive about Optima Tax Relief is its transparency. 

Optima Tax Relief is positioned to help clients anywhere in the country. It works with clients in a variety of scenarios — even if you don’t have tax issues. However, its greatest expertise is in helping people resolve IRS or state tax debt. 

If you’re overwhelmed or mystified by your taxes, Optima Tax Relief’s two-phase process could offer the necessary clarity. 

Optima Tax Relief vs Other Tax Relief Competitors 

The tax relief industry has a lot of competitors. Here’s how to compare some of the most popular companies. 

What You Should Know About Tax Relief Services

A lot of people use tax relief services to resolve their lingering tax issues and leave positive reviews, but this isn’t the case for everyone. Sometimes, tax relief can cause additional headaches.  

This is because there are a lot of bad players in the tax relief world. So many people are duped by tax scams that the IRS continually updates its website with new scams as they occur.

These can range from “ghost” tax preparers to fraudulent emails claiming to represent the IRS or a popular tax software preparation company.

These scams are popular year-round, but particularly at tax time. In 2016, for example, the IRS saw a 400% increase in phishing schemes at tax time. 

Keep in mind that if your situation is simple enough, you might be able to resolve it on your own. The IRS has many online tools, such as their Offer in Compromise Pre-Qualifier, that you can use to get started. Resolving your tax debt yourself can save you money.

If you don’t feel comfortable trying on your own, there are several free government-sponsored and nonprofit tax resources that you can access. 

The Bottom Line

If you’re going to use a tax relief company to help you with your tax issues, Optima Tax Relief offers a clear, transparent approach and their client bill of rights puts the client experience front and center. 

However, be sure to shop around before moving forward with any tax relief service. It’s smart to get a free consultation when offered.

Then, compare each plan you’re presented with and go with the company that not only works best for your budget but who you feel is best aligned with your working style. 

Not sure where to start? Compare the top companies online before moving forward with a consultation. 

How We Review Tax Preparation Software

Good Financial Cents reviews various tax preparation software options, emphasizing user experience, feature sets, and accuracy in calculations. We aim to provide users with a balanced perspective, assisting them during tax season. Our editorial process is transparent and thorough.

We source data from software providers, testing functionalities and evaluating user interfaces. This hands-on approach, combined with our research, ensures a comprehensive review.

Each software option is then rated based on its strengths and weaknesses, resulting in a star rating from one to five.

For a deeper understanding of the criteria we use to rate tax preparation software and our evaluation approach, please refer to our editorial guidelines and full disclaimer.

Optima Tax Relief Review

Product Name: Optima Tax Relief

Product Description: Optima Tax Relief offers specialized services to assist Americans with tax-related concerns, including tax debt negotiation, audit defense, and settlement. They prioritize transparency in their processes and boast an A+ rating with the Better Business Bureau since 2012.

• [ Learn More Here ]

Summary

Optima Tax Relief stands out in the tax relief industry with a comprehensive approach to handling tax issues. Beyond offering tax negotiation and settlement services, they are adept in IRS audit defense, ensuring clients receive honest and smooth experiences. One of their signature offerings is a free consultation that engages tax specialists and chartered accountants to devise a clear, transparent plan for clients. Furthermore, their longstanding A+ accreditation with the BBB emphasizes their commitment to excellence and trustworthiness in the field.

• Cost and Fees
• Customer Service
• User Experience
• Product Offerings

Overall

4

Pros

• Transparent Processes: Optima Tax Relief is upfront about each stage, giving clients a clear understanding of the services rendered and the expected timeline.
• Broad Service Offering: Beyond just tax resolution, they offer tax preparation, IRS protection, and identity theft monitoring.
• Highly Reputable: Their A+ BBB rating and accreditation since 2012 attests to their consistent high-quality service.
• Client-Centric Approach: They have established a client bill of rights, ensuring clear expectations, straight talk, and a smooth client experience.

Cons

• Potential for Additional Costs: Some services, like tax preparation beyond their basic plan, might incur extra fees.
• Industry Challenges: Like many in the tax relief industry, they face challenges from tax scams, though they are committed to combating such issues.
• Not Always Necessary: While they offer extensive services, some individuals with simpler tax issues might find solutions on their own or through free resources.

The post Optima Tax Relief Review: Transparency and Clarity Take Priority appeared first on Good Financial Cents®.