What the $2.04 Billion Lottery Winner Did With Their Lump Sum Payout

What the $2.04 Billion Lottery Winner Did With Their Lump Sum Payout

Sean Fisher, AI Editor   Mon, August 14, 2023 

For most, winning the lottery is a distant dream. But for Edwin Castro, it became a reality when he struck gold with a $2.04 billion Powerball jackpot in November 2022, the largest in history.

Choosing a one-time lump-sum payment, Castro received an astonishing $997.6 million, just short of a billion. Here’s a look at how he has used his unexpected fortune.

High-End Real Estate Ventures

Shortly after his massive win, Castro treated himself to two opulent homes in California. He first bought a breathtaking $25.5 million mansion in Hollywood Hills in March 2023, three months after he claimed his lottery prize. According to several reports, the estate boasts an impressive 13,500-square-feet of luxury, with features like five bedrooms, seven bathrooms, a game room, a wine cellar, a movie theater, a bar, a fitness studio, and a spa.

In addition to its rich interior, the Hollywood Hills home offers the epitome of outdoor luxury, with an infinity pool, a fireplace, and seven-car garage, all encased by glass walls that provide a panoramic view of the Los Angeles cityscape.

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/2-04-billion-lottery-winner-120009921.html

6 Unusual Expenses Worth Paying Off Before You Retire

6 Unusual Expenses Worth Paying Off Before You Retire

Vance Cariaga   August 12, 2023

You can expect to experience many changes in retirement, and one of the biggest has to do with your finances. Unless you decide to keep earning money on the side, you'll be living on a fixed monthly income that doesn't include the normal work raises, bonuses or opportunities to increase your income by switching jobs.

This shift puts a premium on reducing your expenses in retirement to give yourself plenty of financial breathing room. According to an analysis from Fidelity Investments, you can expect to spend between 55% and 80% of your yearly work income throughout your retirement. About 15% of your post-retirement living expenses will go to healthcare costs alone.

One thing you will want to do is pay off as many debts as you can, including mortgages, car loans, student loans, medical bills and credit cards. Entering retirement free of debt can solve a lot of financial problems down the road.

You should also pay off other expenses that could potentially tie you down financially in retirement -- including expenses you've built up that don't fall under the normal financial umbrella.

Keep reading to learn about six unusual expenses that are worth paying off before you retire.

Personal Bank Loans

Personal loans provide lines of credit that can be used for everything from home renovations and medical bills to weddings, but they don't come cheap. The average overall interest rate for personal loans (as of Aug. 8, 2023) is a sky-high 21.4%, Business Insider reported. The average low rate is 10.17%, while the average high rate is 31.91%. Given these rates, paying off personal loans before retiring is one of the best financial moves you can make.

Family Loans

Borrowing money from family members has become more commonplace in recent years due to the effects of the COVID-19 pandemic, high inflation and soaring home and mortgage costs. 

If you have a family loan, you probably pay much less interest than you would with a commercial loan -- though you have to pay some interest in order for it to be considered a loan instead of a gift. Paying off a family loan before you retire serves two purposes. 

First, it lowers your overall debt load. Second, it will probably ease your personal relationship because the financial element is no longer involved.

Divorce Fees

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/retirement-savings-6-unusual-expenses-130055142.html

What to Do If You Get Rejected for a Loan

What to Do If You Get Rejected for a Loan

Rachel Christian, CEPF®  Senior Writer  AUGUST 2, 2023

Some of the links in this post are from our sponsors. We provide you with accurate, reliable information. Learn more about how we make money and select our advertising partners. So, you’ve applied for a loan, and unfortunately, things didn’t go as planned.  Well, you’re not alone.

In June 2023, the overall rejection rate for credit applicants increased to nearly 22% — its highest point since June 2018 — according to a report by the Federal Reserve Bank of New York.

The increase affected people in different age groups and was highest among people with credit scores below 680, the report found.

So what happens when you get rejected for a loan? We’ll explain what it takes to get a loan, why lenders might slam the door on your application and most importantly, how you can improve your odds and even snag a loan with bad credit.

Requirements for a Loan

You’re eager to get a loan, but do you know what lenders look for? Let’s start with the basics.

Whether you’re looking to a buy a house or get a personal loan, you typically need to meet these requirements:

Good Credit Score: Lenders use your credit score to assess your risk as a borrower. A good credit score usually falls in the 670 to 739 range. The higher your score, the better your chances of approval.

Steady income: Lenders need to see that you have a stable income to repay the loan, such as a regular job or self-employment income.

Low Debt-To-Income Ratio: This is the proportion of your monthly debt payments compared to your monthly income. A lower debt-to-income ratio signals better financial health. Lenders usually look for a DTI of 40% or less.

Positive Credit History: A solid credit history shows lenders you’ve managed credit accounts responsibly in the past.

Collateral: With a secured loan, an asset (like a car or home) acts as collateral to help offset the risk. This can be an option if you have bad credit or want a lower interest rate.

Is this your first time applying for a loan? Check out our explainer on how loans work.

6 Reasons Why You Might Get Denied for a Loan

To continue reading, please go to the original article here:

https://www.thepennyhoarder.com/debt/denied-for-a-loan/

Are You Rich? Then You Should Probably Have This

Are You Rich? Then You Should Probably Have This

Ben Geier  Thu, August 10, 2023

Trusts are useful financial tools, often used for the purpose of planning an estate. A trust is essentially a legal framework into which ownership of assets can be placed. These assets can include financial products like stocks and bonds, or it can include real physical property, like land, jewelry or vehicles. There are a number of reasons one might use a trust, including, but certainly not limited to, estate planning scenarios. If you think you might need a trust or you want help setting one up, consider working with a financial advisor.

How Property Trusts Work

Technically speaking, there isn’t a specific type of trust known as a “property trust.” Any trust can be filled with a myriad assets, including property and real estate. If you hear reference to a property trust, it's more than likely either a revocable trust or an irrevocable trust. Both of these can be seeded with property, along with other assets like investments, family memorabilia and cash.

A revocable trust is one where you have the ability to add property and take it out throughout your lifetime. For instance, if you store a home in a revocable trust, you can remove it from the trust. At a later date, you can then return it to direct ownership if that makes it easier to sell. You can also remove personal effects, such as a family heirloom, if you want to pass it on to another family member. A revocable trust can also be abolished if it's no longer necessary.

An irrevocable trust, on the other hand, is exactly what it sounds like - a trust that cannot be abolished and cannot have property removed from it. Irrevocable trusts are best used to shelter property that the current owner is not going to sell or otherwise need out of the trust.

If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.

Who Needs a Property Trust?

To continue reading, please go to the original article here:

https://news.yahoo.com/finance/news/property-trust-needs-one-153536214.html

7 Tips to Save You When You Feel Like Shopping

7 Tips to Save You When You Feel Like Shopping

By Karen Trefzger

Fall is around the corner, and if you’re anything like me, that can make you feel like shopping.  New clothes, new home décor, those pretty autumn-themed dishes, cute earrings, a fragranced candle – you name it, we may just feel we need something new to celebrate the change of seasons.

But every time we follow this need-to-shop impulse, we may be adding to our clutter.  We may be adding to debt (or at least reducing what we can save or give).  We may be giving in to our desire for more, more, more (and doesn’t that look like a simple case of greed?).

I know it’s fun to get something new.  At first, it feels amazing.  You tell your friends, maybe even post pictures on social media.  But very quickly, that new thing becomes background noise, and then you need the next purchase to feel the excitement all over again.  You never find satisfaction.

Instead, let’s think of ways to renew our appreciation for what we own and take advantage of all that’s available to us.

7 options to control needless spending

1.  Get outside.

We were created to live on this earth, and its perfect design already takes into account our desire for both variety and stability.  Each season has its gifts – all new and yet familiar.

So get outside and enjoy the roadside wildflowers (they won’t last long). Relish summer’s variety of sunny skies and thunderstorms, fresh cool mornings and long warm evenings. Look for birds building nests and babies loudly demanding to be fed. Can you drive to the country and visit a farm stand for the freshest produce?

Go on a walk, a bike ride, a hike, or a picnic today.

2.  Swap belongings.

This might be an old trick you use with your children’s toys:  box up some of the things they don’t play with as often and store them for a few months.  Then when you bring them out again, it feels like everyone got a bunch of new toys!

Guess what – this works with adults too.  You know how when you put up the Christmas decorations your house feels new and noticeable, even if the decorations are the same ones you’ve been using for years?  Get that same feeling by swapping framed photos, wall art, lamps, throw pillows, and other small decorative items.  You can even swap chairs, side tables, and other small pieces of furniture.  Move things from the living room to your bedroom to the dining room to the guest room, entry hall, or home office.

As you do this, you can handle and dust everything, and make sure it’s something you really love and want to keep.  Then you can enjoy noticing your same belongings in different surroundings and different groupings.  It’s a way to keep everything fresh and in the spotlight, because you got out of a rut and shook things up a bit.

To continue reading, please go to the original article here:

https://nosidebar.com/7-tips-to-save-you-when-you-feel-like-shopping/

The Relative Value of Money

The Relative Value of Money

Financial Panther - Last Updated on April 17, 2023

There’s a concept that I’ve been thinking about over the past couple of years, especially as I’ve made this transition from a full-time, professional, real job, to a quasi-fake job as a blogger and gig economy worker. It has to do with a concept you could call the relative value of money.

When I think about what that means, it’s basically the idea that money you earn from one activity might be worth more to you personally compared to the money you earn from another activity. In fact, it might be worth so much more to you that you’ll opt to spend your days earning money in that manner even if it means you’re making less money from an objective standpoint. This concept has really come into clearer focus to me over the past few years and I think it helps explain why I’ve made a lot of the work decisions I’ve made.

One of the weird things I’ve done consistently over the past few years is doing pretty low-level side hustles using sharing economy and gig economy apps. From an objective standpoint, it really didn’t make much sense for me to do all of this stuff. At the peak of my lawyer career, I was making $300 or more per day from my salary, obviously more than enough to live very comfortably. And yet, even though I made all of this money, I still chose to spend my spare hours doing silly things like delivering food to people on my bike and selling stuff I found in the trash.

The common criticism I’d get was that doing this stuff was a waste of my time. The better use of my time would be to focus on my job and continue to progress in my legal career. Eventually, I could try to become a partner somewhere or just do something to continue to increase my salary, or at least to increase my prestige.

In truth, that’s probably what I should have done, at least if we’re looking at pure numbers. I could obviously make much more money as a lawyer than I could from all of the stupid things I was doing. But the few bucks I made doing my random gig stuff felt so much more valuable and rewarding to me compared to any dollar I earned from my regular paycheck.

The thing I’ve learned to value more and more is control over my life. I suspect that’s something a lot of people on the path to financial independence value too. The money I made from my day job, however, was the exact opposite of control over my life. I had to be at the office at a certain time, do things that other people told me to do, and basically, plan my life around my job. It made me feel trapped.

A dollar might have the same objective value no matter how you choose to earn it. But how you personally value that dollar is another matter. I think that’s worth thinking about.

Thinking About The Relative Value Of Money

To continue reading, please go to the original article here:

https://financialpanther.com/the-relative-value-of-money/

The US Credit Score Went Down — What Does That Mean for Your Money?

The US Credit Score Went Down — What Does That Mean for Your Money?

Jordan Rosenfeld  Thu, August 10, 2023

Most of us know that adults have a personal credit score that reflects how well they handle their debt-to-income ratio, how quickly they pay off debts and how long they hold these debts, among other things. This personal credit score is the way institutions and people that might loan money or make other fiscal decisions decide whether it is low-risk enough for them to do so.

The United States also has an overall credit score, typically bestowed upon it by one of a few credit rating agencies such as Moodys, Fitch or Standard and Poors. Fitch just delivered America a bit of a blow by “downgrading” its rating from “AAA” to “AA+.” What does this mean for the country and for your personal money? Experts explain.

Why Did Fitch Downgrade the US?

Fitch made this assessment based on “the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance…” The rating takes into account how well a country is doing in relationship to other “peers” and the U.S. is just not rating high right now.

Fitch actually threatened this action back in May when Democrat and Republican lawmakers could not agree on the borrowing limit and the Federal Treasury was scarily close to running out of money. The rating downgrade is partly a way to get governments and their treasuries to think carefully about their decisions’ effects on the economy at large.

Fitch made its downgrade decision by looking at economic indicators, which are not pointing to a rosy next few years. Fitch expects that over the next three years, things like tax cuts, additional spending and “political gridlock” will cause our nation’s finances to “deteriorate.” It is also taking into consideration factors such as the $1.39 trillion federal deficit, which is an increase of 170% from where it was around the same time last year.

What the Credit Score Drop Means

“A credit rating is simply a rating… that is gauging the likelihood of a credit default from companies, governments, central banks, or municipalities, etc.,” said Shawn Stone, CRPC®, director advisory services at Retirement Planners of America.

The higher the rating, the lower probability of a default. The lower the rating, the higher probability of a default. “The lower the rating, the higher yield providers must give on their debt issuance to entice people to buy their bonds creating debt to operate on. Same but in opposite of higher rated companies, they will offer lower rates on debt/bonds,” he said.

No Immediate Cause for Concern

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/us-credit-score-went-down-120040254.html

Five Freedoms

Five Freedoms

Jonathan Clements  HumbleDollar

FOR THREE YEARS, I lived on Roosevelt Island, in the middle of New York City’s East River. It’s a wonderful place—a quiet, friendly, low-crime oasis in the middle of one of the world’s largest, most frenetic cities.

During my time there, the Franklin D. Roosevelt Four Freedoms Park opened on the island’s southern tip. The park is named after a 1941 FDR speech, where he articulated “four essential human freedoms”: freedom of speech, of worship, from fear and from want.

FDR’s speech was inspiring. Managing money is altogether more prosaic. Still, I’d argue that our pursuit of money is also about a hunger for freedom—with five dimensions:

1. Freedom from fear.

We all want a sense of financial security—and yet all too many folks lead fragile financial lives. If our income barely covers our expenses, we may be okay if it’s a typical month. But so few months turn out to be typical.

We face frequent financial shocks, some large, some small. The car breaks down. The roof needs to be replaced. We lose our job. If we have scant savings and little financial breathing room in our monthly budget, such shocks can leave us scrambling to cover the bills and send our anxiety soaring.

As I mentioned last week, a Consumer Financial Protection Bureau study found that the sum we keep in liquid savings—meaning cash, checking accounts and savings accounts—has a huge impact on financial well-being. The price to escape much of our financial fear? All it may take is a few thousand dollars tucked away in the bank.

2. Freedom from financial dependence.

We’re all dependent on other folks. Even billionaires need others to produce the goods and services they consume, to buy the investments they sell and to purchase the products their businesses make.

But there are degrees of financial dependence—and the more dependent we are, the shakier our financial life can seem. I don’t like being financially dependent on others, and I can’t imagine many do.

Don’t get me wrong: When the day comes, I won’t have any qualms about claiming my Social Security check. But I would never want to be entirely dependent on a government program, a charity or family members.

Even working for others strikes me as a form of financial dependence, though it’s one most of us can’t avoid. It’s terrible to feel our livelihood hinges on a capricious boss. True, if we’re unhappy, we can always take our labor elsewhere. But switching employers is a costly, anxiety-inducing business.

3. Freedom from financial obligations.

To continue reading, please go to the original article here:

https://humbledollar.com/2020/01/five-freedoms/

Everyone Has Their Own Money Trauma

Everyone Has Their Own Money Trauma

Posted August 10, 2023 by Ben Carlson

A reader asks:

I’m 38 years old and for most of my adult life I didn’t make much money. I made just enough to survive with nothing left to invest. Everything changed a few years ago. I went from making $35k per year to around $140k in about 4 years. At first I spent everything, but in the last two years I’ve started doing the opposite. I save everything. My monthly expenses including my mortgage are less than $1,000. My after-tax saving rate is somewhere in the neighborhood of 80-90%. In the last two years I’ve saved about $150k not including maxing my 401k and Roth. My job isn’t going anywhere but I have a constant fear that something is going to happen and everything will be ripped away. Key thing is I have no real skills but happened to hit the lottery at a company that has rewarded me for a decade of hard work. My question is: most financial experts would probably say I’m saving too much but I’m wondering if my situation justifies the high savings rate?

I love this question because it shows how money is more about your mind than math.

A lot of the questions I receive can be similar from a financial perspective but we all have our own forms of money trauma depending on our circumstances.

First off, while I like it when people remain humble but don’t sell yourself short. Hard work is a skillset and if your company has given you a 4x raise in four years you’re obviously doing something right.

I understand the trepidation to spend money in a situation like this.

The lottery mindset can cause some conflicting money emotions.

Most people spend their entire careers methodically increasing the amount they make over time and slowly building wealth through regular savings.

One of the reasons so many actual lottery winners end up broke is because it’s not normal to experience such an abrupt increase in your wealth.

I wrote about this in Don’t Fall For It:

According to the Certified Financial Planner Board of Standards, almost one-third of lottery winners declare bankruptcy. These winners ended up in a worse place than they were in before winning gobs of money. Lottery winners have also been shown to be more susceptible to drug and alcohol abuse, depression, divorce, suicide, or estrangement from their family.

Even the neighbors of lottery winners are more likely to go bankrupt than the average household. Researchers at the Federal Reserve discovered close neighbors of lottery winners in Canada were more likely to increase their spending, take on more debt, put more money into speculative investments, and eventually file for bankruptcy. And the larger the winnings, the more likely it was others in that neighborhood would go bankrupt.

Wealth is simply the difference between what you make and what you spend, so the secret sauce to building wealth over time is avoiding lifestyle creep as your income rises. This is one of the reasons so many lottery winners go broke. Their lifestyle grows exponentially larger than their pile of money.

To continue reading, please go to the original article here:

https://awealthofcommonsense.com/2023/08/everyone-has-their-own-money-trauma/

5 Key Signs Your Finances Are in Trouble

5 Key Signs Your Finances Are in Trouble

Crystal Mayer   Tue, August 8, 2023

If you feel like there is never enough money in your bank account, you are not alone. According to a survey conducted by the LendingClub Corporation and PYMNTS.com, 64% of adults in America reported living paycheck to paycheck in March 2022. Millions of people are unable to get ahead or put money aside for savings, meaning that they may be struggling financially.

When you are in the middle of it, however, it can be challenging to determine just how dire your financial situation is. You may have become numb to the fact that you routinely pay bills late or are swimming in overdraft fees. Many people simply have no other choice, given that wages have not kept pace with the high cost of living in most areas. But recognizing that your bank account is not healthy is half the battle, so here are five key signs your finances are in trouble.

You Are Late or Miss Your Monthly Payments

One of the most telling signs that you may be spending more than you make is if you regularly miss payments or even if you have to pay them past the due date. If you cannot make payments on time, your credit score will be negatively impacted.

As your credit score drops, you will get less favorable lending terms making it more expensive for you to buy a car or home. In some cases, you may not qualify at all. If you find yourself missing due dates, you need to evaluate your spending habits. Start by writing down all of your income and expenses. See if there are ways that you can cut back to ensure that you pay your monthly bills on time. Set the bills on automatic payments to ensure they are made in a timely manner.

You Live Paycheck to Paycheck

If you are one of the 166 million that live paycheck to paycheck, you may be in more financial trouble than you realize. Living paycheck to paycheck is not only stressful, it is not sustainable. One emergency, such as a car wreck or job loss, could spell financial ruin.

To get out of the habit, determine if you are living paycheck to paycheck because you spend beyond your means or if it is that you truly cannot afford even a modest lifestyle. If you spend a lot of money on nonessentials, then you should be able to cut back and put money into savings. If your paycheck strictly goes toward the basics, you might need to consider relocating to a less expensive area or taking on a side hustle.

You Don’t Have an Emergency Fund

To continue reading, please go to the original article here:

https://www.yahoo.com/finance/news/5-key-signs-finances-trouble-120008832.html

What to Know About Hidden Fees That Increase the Price of Everything

What to Know About Hidden Fees That Increase the Price of Everything

Farnoosh Torabi  Aug. 21, 2022

What's happening

Many companies have found ways of passing down increased costs to consumers, with extra charges tacked on to your bill at checkout.

Why it matters

It's called drip pricing, and these new fees and surcharges are affecting customers who are already struggling with rampant inflation.

What's next

Knowing what merchants are charging can help you manage your budget and make better buying decisions. The prices for nearly everything have ballooned in the past year. Record high inflation means the cost of food, fuel and other everyday essentials has gone up, which has put severe financial pressure on US households, particularly low-income Americans.

Look out for surcharges like these on your restaurant bills. Courtney Johnston/CNET

And then there's the hidden costs added to your purchase before checkout, or tacked on to the receipt without warning. These additional merchant fees are called drip pricing, and they're inflicting pain on our already-stretched wallets. Businesses often claim these fees are the only way to offset the burden of inflation and supply chain shortages. For consumers, it means the things we buy are pricier than they initially appear.

"Most of the time we find out about these fees when it's time to pay, not before," Ashley Feinstein Gerstley, author of Financial Adulting, told me via email. "Because these fees really run the gamut, you never really know what you are going to get."

I asked my Instagram followers about these new and surprising fees, and they gave me loads of anecdotes. From restaurants to medical offices to rideshare services, here's a look at some charges that I discovered. And I'll offer tips on how to manage these unexpected surcharges.

Restaurants are charging more, and not just for food

Many restaurants are still reeling from a fiscal slump during the first year of the COVID-19 pandemic. Now, with rising food and payroll costs, eateries continue to struggle. "Average small business restaurants run on very tight margins of around 3 to 5% pre-tax," said Hudson Riehle, senior vice president of research with the National Restaurant Association. "The typical restaurant business model is not set up to deal with this sustained and accelerated cost of food and labor, which is putting extraordinary pressure on operators, and indications are these will continue."

Here are some of the new fees you may see on your restaurant bill:

To continue reading, please go to the original article here:

https://www.cnet.com/personal-finance/banking/what-to-know-about-hidden-fees-that-increase-the-price-of-everything/