How to Avoid Financially Destructive Revenge Spending

How to Avoid Financially Destructive Revenge Spending

March 4 2023   Financial Imaginer

It’s no secret that revenge spending has become a [post-pandemic] phenomenon, as people try to make up for what they believe they might have missed out on during the pandemic.  People are playing catch-up, trying to even the score on their deferred consumption. However, while revenge spending can be cathartic and temporarily rewarding, it can also have serious financial consequences if not managed properly.

Revenge spending can take many forms:

Such as catching up for yourself, getting even with your partner or family, or simply YOLO’ing your way through life.

Unfortunately, revenge spending doesn’t just lead to heightened inflation across the globe but it can also lead to serious financial consequences if not managed properly. It could even destroy potential generational wealth in families.

In this article, we’ll explore the implications of revenge spending and provide some tips on how to overcome it.

Are you ready to talk about revenge spending?

What Is Revenge Spending?

Revenge spending is a phenomenon characterized by impulsive and often excessive spending in an attempt to make up for what people believe they may have missed out on.

It is essentially an act of attempting to fill emotional voids with material items or experiences.

Revenge spending can take form in expensive vacations, luxury purchases, extravagant dates, etc., and it has become increasingly popular over the past year [mainly due to the uncertainty caused by the pandemic].

“This attitude can fuel a habit: “revenge spending,” which, as the name says, is shopping to get back at someone or something that wrongs us — like a job layoff, slumping economy, relationship strife, even a global trauma like the pandemic.”

Dr. Juli Fraga

Revenge spending has both short and long-term implications for not just individuals but for entire economies as well.

Inflation anyone?

Revenge spending can contribute to inflationary pressures in an economy [if it goes unchecked] especially when such expenditures are not backed by income stability or wealth.

In addition, revenge spending also has long-term implications for affected individuals.

It can turn into monetary downward spirals!

Post Pandemic Revenge Spending

In the past two years, revenge spending has become some sort of “post-pandemic phenomenon” that has been popping up around the world.

People are indulging in revenge spending on all kinds of things in an attempt to catch up on what they believe to have missed out on during the pandemic.

It’s almost like the big Marshmallow Test unwind!

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

https://www.financial-imagineer.com/revenge-spending/

The Money Lessons Grief Teaches Us

The Money Lessons Grief Teaches Us

 By Kara

I recently I lost my grandmother. It’s been a really hard time and it’s really sad. But today, I don’t want to talk about her. I actually want to talk about how my pursuit of financial independence and frugal living has impacted my ability to grieve.

We don’t make space for grief in the U.S.

There is no federal law that guarantees paid time off for bereavement, including funeral time. Right now it’s a sad time, nationally speaking. 1,117,054 Americans have died from COVID. And 72% of Americans either know someone who died from COVID or was hospitalized because of COVID.

Several of our peer nations, including France, Japan, and New Zealand all do have guaranteed paid time off for grieving. But here in the United States, only three states guarantee that same thing.

The Fair Labor Standards Act, the foundation of US labor policy, does not require employers to provide paid leave, including vacation time, to convalesce or time to plan or attend a funeral. In the United States, just three states have passed their own policies. Oregon requires employers to provide 12 unpaid weeks of leave, two of which can be used for bereavement after the death of a family member. Illinois offers two weeks of unpaid bereavement leave, but only after the death of a child.

 Maryland recently extended its flexible leave act to require that employers who offer paid leave allow it to be used for bereavement. So even the states that do offer this don’t really offer it right. It’s under very specific circumstances that you are allowed to have mostly unpaid time off to feel sad after the loss of a family member or a loved one.

Since I work for myself, I took four days completely off work after my grandma passed. And that’s a luxury that most Americans do not have. It’s a luxury that I have only because of the fact that I do work for myself and the specific ways that I’ve structured my business.

Frugality has helped me have time to grieve

 If you’re more of a visual learner or want to hear more, I talk about my upbringing and my road to FIRE in this video:

https://www.youtube.com/watch?v=313sjuPK8NA

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

https://bravelygo.co/the-money-lessons-grief-teaches-us/?utm_source=rss&utm_medium=rss&utm_campaign=the-money-lessons-grief-teaches-us

What Is a Power of Appointment For a Trust or Will?

What Is a Power of Appointment For a Trust or Will?

Ashley Kilroy   Sat, April 1, 2023

Establishing a trust or will is vital to a well-designed estate plan; you might even use both. However, even the best estate plans can't anticipate changes in the future or head off new tax legislation. Fortunately, a power of appointment can help your beneficiary take control of your estate to minimize taxes and keep the property from falling into the wrong hands. Here's how it works.

Consider working with a financial advisor if you need help setting up an estate plan or managing inherited money.

What Is a Power of Appointment?

A power of appointment is an ability a grantee or beneficiary receives from the grantor or creator of a trust. The power of appointment allows the beneficiary to change a trust in specific ways in specific contexts. For example, a grandparent might place his or her assets in a trust and give their grandchildren the power of appointment over the trust once the grandparent passes away.

In addition, a power of appointment affects irrevocable trusts – which, as the name implies, are not easy to change. Fortunately, a power of appointment means beneficiaries can modify a trust within the boundaries the trust's creator sets.

Types of Powers of Appointment

There are two types of powers of appointment: general and limited. General power of appointment allows the appointed individual to change and direct the trust however he or she wishes. In essence, a general power of appointment gives over complete control of the trust, and the person who has that power can allocate the trust's assets how that person sees fit.

On the other hand, a limited or special power of appointment has boundaries the holders must follow.

Powers of Appointment and Ownership

Depending on appointment type and state law, powers of appointment have varying effects on ownership. For example, your state's laws may allow you to immediately own property within the trust as the holder of a general power of appointment. However, such ownership also exposes the property to your creditors.

Therefore, if you're in debt or serious financial trouble, the ownership you receive through a power of appointment could mean losing the property altogether. That said, state law may prohibit creditors from seizing the property until the power holder dies. On the other hand, a limited power of appointment typically doesn't grant property ownership.

Power of Appointment Tax Treatment

A power of appointment can affect your tax circumstances, even if you don't exercise the power. Specifically, tax law declares that a general power of appointment designated after Oct. 21, 1942, will add the related trust's value to the power holder's estate upon that person's death. As a result, a general power of appointment usually exposes a trust to federal estate taxes.

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

https://finance.yahoo.com/news/power-appointment-trust-130014490.html

How to Organize Your Tax Documents for Your Accountant

How to Organize Your Tax Documents for Your Accountant

January 7, 2023 Last Updated on March 8, 2023 by Carolyn

Though this post is directed at US taxpayers, It still should be useful to non-US taxpayers but keep in mind that form references such as 1099’s, Schedule C and US tax rules may not apply. Investment advice published here is of a general nature only as disclosed here.

You have received all your tax slips (w-2’s, 1099’s, etc.), and you have records of your other income and expenses, but now what? How do you organize your tax documents so that your accountant can prepare your taxes with ease?

Hiring a Professional Accountant

This may be a bit biased considering I am a professional accountant but hiring a professional to prepare your income taxes can be a really smart idea.

Not only can it save you a lot of time preparing your taxes in lieu of doing it yourself in Turbo Tax or Tax Act ( many people tell me it takes them 8-10 hours to prepare their own returns) but it can actually save you money and give you peace of mind that you haven’t missed something.

It’s a tax professional’s job to know what deductions you are eligible for and to provide tax planning advice to maximize deductions and minimize income tax liability.

A good accountant will get to know you, your family, and your business so they can spot potential deductions whether it be that your eldest has started university and might have tuition credits or perhaps you have undertaken home renovations and can take advantage of some energy credits. Expect to answer some questions and be perturbed if you’re not asked any!

What Your Tax Preparer Needs to Know

How to Organize Your Tax Documents for Your Accountant?

First of all, be aware that just because you’ve hired an accountant to prepare your taxes doesn’t absolve you of any tax preparation work.

Gone Are the Days of Handing over A Box Full of Receipts

Gone are the days of plunking a shoebox full of receipts on your accountant’s desk and saying “call me if you have any questions”. Do this and you will most surely be shown to the door. Continue reading to find out how to organize your tax documents for your accountant.

Most accountants don’t want to see any receipts at all. What they do want to see is a summary of income by type as well as a summary of deductions by type, followed by another page with a detailed list of those same income and deduction items, whose totals ties into the figures listed on the summary.

Income

I recommend listing out all income reported on forms in this order: W2s, 1099-int, 1099-div, 1099-r, SSA-1099, 1099-B, 1099-G and K-1s. Use 2 columns, one for taxable income, and one for federal tax withheld ( if you have state tax withheld add a 3rd column).

If you have rental income or self-employed income list the income and expenses on a separate page and then just list the property address or business name on your summary and cross-reference to the detailed schedule.

Rental Income and Expenses

You need to separately list income and expenses for each rental property you own.  Income will include all rent received including last month’s rent deposits but not damage and pet deposits.

Expenses that you might have include:

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

https://tucandream.com/how-to-organize-your-tax-documents-for-your-accountant/

How to Stop Being Broke: Change Your Money Mindset

How to Stop Being Broke: Change Your Money Mindset

March 14, 2023 Last Updated on March 23, 2023 by Carolyn

How to Stop Being Broke?

Are you tired of living paycheck to paycheck, and having nothing to show for it? You have a good-paying job but still, it’s a financial squeeze to get through the month and make ends meet. You want to stop being broke but don’t know where to start. More than likely. it’s your money mindset that’s keeping you broke. Before you can change your money mindset you need to know what exactly it is.

What is Money Mindset?

Let’s start with what money mindset is not. For many people who hear the phrase “money mindset” an image of a person like Charles Dickens “Ebenezer Scrooge” counting his coins pops into their head, a person obsessed with money. This is not what money mindset is.

Money mindset is your personal relationship with money; how you feel about it, your beliefs about money, and its role in the world.

Believe

Believe..positive thoughts will yield positive outcomes (image by Nini kvaratskhelia of Unsplash)

Your money mindset is somewhat akin to the law of attraction, how you feel and relate to money will dictate whether you have no money, just enough money, or an abundance of money. Being an extreme left-brain type I’d love to say the path to financial success is to simply work hard and spend less, but sadly this is not the truth, money mindset comes into play and it’s amazing how much it controls the outcome.

Different types of Money Mindsets

Scarcity Mindset VS Abundance Mindset

I’m sure you’ve noticed that some people are inherently spenders while others are savers. These spending habits aren’t related to having an abundance of money or lack thereof, they are a reflection of that person’s individual money mindset.

There are basically two basic types of money mindsets: scarcity mindsets and abundance mindsets. These can be further broken down into different sub-types. Do you identify with any of the following scarcity mindsets? Don’t worry, identifying the problem is the first step in your journey to stop being broke.

Scarcity Mindsets

Scarcity mindsets are based on the belief that there are limited resources in the world, and if someone takes more, you’ll get less. This mindset cultivates fear, jealousy, and selfishness.

I Have Enough Mindset

This is the mindset; “I’m comfortable with what I have. I can pay my bills, I have a roof over my head, why do I need more?”

This kind of mindset is dangerous, it’s a mindset of avoidance. You will never have more than enough and the loss of a job, or a sudden emergency expense, can push you over the edge where you don’t have enough.

Money more than likely causes you stress after all you believe, “ money is the root of all evil”.

Money Grows on Trees Mindset

My husband used to justify additional expenses by saying “I’ll just shoe another horse” (he was a horseshoer). The problem is did he really just shoe another horse? No, he didn’t actively go out and look for another horse to shoe. If not reined in, he had a habit of spending every dollar twice.

 This is the “money grows on trees” mindset, I can always earn another dollar so it’s OK to spend it today. It can also be considered a debt mindset or a spenders mindset. You try to buy happiness, and instead, end up with debt and stress.

This mindset will most likely get you into a lot of financial trouble.

“Never spend your money before you have it.” –Thomas Jefferson

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

https://tucandream.com/how-to-stop-being-broke-change-your-money-mindset/?fbclid=IwAR0lNjGu_Oz7fRLLcRtwvWyGm0QdhbPI5i60S7YPtcuZ9usSiIjH1K5iYwA

How To Be Proactive About Protecting Your Savings Account

Banking 2023: How To Be Proactive About Protecting Your Savings Account

Heather Taylor  Wed, March 29, 2023

With recent bank failures headlining the news cycle, many customers might be worried about their funds.  The good news is there is a lot of protection provided to banking customers, no matter the dollar amount of your financial assets. Here are a few proactive steps you can take to protect your savings account and insure your deposits.

Review FDIC Coverage and Resources

You might have noticed the fine print for your bank states it is FDIC insured. What does this mean?

Glen Goland, CFP and senior wealth strategist at Arnerich Massena, said FDIC (Federal Deposit Insurance Corporation) coverage has ensured depositors for 90 years that their funds would be available. This is regardless of what is happening in the financial world or to one’s bank.

FDIC coverage applies to up to $250,000 in deposits. This is per depositor, per insured bank. Different coverage amounts are afforded to trusts and other legal entities.

For those who want to insure their deposits, Goland recommends visiting FDIC: Resources. The resources page provides a listing of ownership categories and applicable coverage amounts. Goland said this should give banking customers a sense of how much coverage they have and how much may be outside this coverage and at risk.

Open Accounts With More Institutions or Put Assets in an Investment Portfolio

There are a few moves banking customers can make if they are holding more than $250,000 in bank deposits.

Goland recommends opening accounts with multiple institutions. This can help keep deposits under the $250,000 threshold. Banking customers also can look into using a Cash Management Account (CMA), which functions like a traditional bank account but spreads your deposits across several partner banks for additional protection.

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

https://finance.yahoo.com/news/banking-2023-proactive-protecting-savings-190439034.html

I Love How Everyone Pretends The Bank Crisis Is Over...

I Love How Everyone Pretends The Bank Crisis Is Over...

March 29, 2023  Simon Black  Sovereign Man

Practically on cue, politicians began their public hearings yesterday about the recent banking crisis.

This was so predictable; every time there’s a major crisis, Congressmen book a committee meeting to express their shock and outrage. They pass new laws to prevent a future crisis. Then their new laws fail to work properly, so they hold another public hearing to express more outrage.

This is the cycle of political problem solving, and yesterday was no exception.

The Senate Banking Committee summoned key officials from the Federal Reserve, FDIC, and US Treasury Department. And the tone was quite angry.

Senators were flummoxed that their thousands of pages of banking legislation had once again failed to provide adequate protection to the US financial system. And they were looking for someone to blame.

This, too, quite predictably, fell along partisan lines. The people on the left somehow found reason to blame everything on Orange Man, while describing bank regulators as “gutsy” and “courageous”. It was bewildering.

Most absurd was how the officials in the hot seat (who, again, represent the primary bank supervisors in the United States) managed to avoid any culpability whatsoever.

The Fed’s Vice-Chairman for Banking Supervision admitted that his agency’s supervisors had rated SVB as a poorly managed bank. And the Fed was further aware of several material weaknesses in SVB’s risk compliance.

They acknowledged that they had advanced knowledge of the banks’ problems.

They acknowledged they should have done something about it. They acknowledged they had the tools and authority to do something about it.

Yet they did absolutely nothing… and somehow ended up being praised as gutsy and courageous.

It’s natural to blame the bank executives for making such idiotic decisions with their customers’ money. But culpability is not mutually exclusive. It’s not either/or. And the regulators had a major role to play in this crisis.

Not only did they escape culpability at yesterday’s hearing, but the regulators even managed to pat themselves on the back for their swift and decisive response to the crisis.

After SVB’s failure a few weeks ago, government officials invoked what’s known as the “systemic risk exception”. This exception essentially gives them sweeping power to deal with a crisis by whatever means necessary.

And all the key officials unanimously agreed that SVB, First Republic Bank, etc. posed systemic risk, and that justifies the massive bailout response.

Isn’t it interesting, though, that “systemic risk” only seems to apply to banks?

You never heard these officials say that baby formula shortages pose systemic risk. Or that inflation itself is a systemic risk. Or that dwindling US oil production is a system risk.

Yet whenever the banks and their somnambulant regulators fail, they call it “systemic risk” and pull out all the stops to save them.

Energy companies, on the other hand, which produce the very thing that all economic activity requires, are tossed out in the cold and demonized at every available opportunity by the President of the United States. It’s bizarre logic.

The biggest falsehood of yesterday’s hearing, however, was the continued insistence by all that “our banking system is strong and resilient”. Coincidentally they presented zero evidence to support that assertion.

In fact most evidence would support the opposite conclusion-- that there are still a number of major problems in the banking system.

The FDIC itself reported that banks across the US have a total of $620 billion in unrealized losses; this is due primarily to the steep decline in bond prices, which are a result of the Federal Reserve’s aggressive interest rate increases.

And bear in mind that the FDIC’s estimate was before the most recent rate hikes. So the updated estimate on unrealized losses right now is most likely higher than $620 billion.

But risks in the banking system go way beyond these unrealized bond losses.

Commercial real estate is an obvious one; Fed data show that banks across the US have loaned out nearly $3 trillion of their customers’ money against commercial property, including office space. Other estimates go up to $5.5 trillion including commercial mortgage-backed securities.

But thanks to new, pandemic-related remote work policies, companies across the US are using less space.

Moody’s Analytics recently reported office utilization rates at roughly 50% of pre-pandemic levels based on security-badge swipe data at office buildings.

Workers simply aren’t showing up to the office like in the past, and office occupancy rates have been steadily deteriorating as a result.

Office vacancy now stands at 12.5% nationwide according to the National Association of Realtors. That’s about a third worse than in 2019.

To make matters worse, the economy is slowing, which will likely trigger additional cuts in office space.

All of this is bad news for banks. They have trillions of dollars of exposure to a rapidly declining commercial real estate market, so even a small increase in loan defaults could spark another panic.

The Wall Street Journal recently reported that estimates of total unrealized bank losses right now, including commercial loans, is a whopping $1.7 TRILLION. That’s the vast majority of all bank capital in the United States… so this is still an enormous problem.

But everyone keeps playing the same chorus again and again: “the banking system is strong, the banking system is strong.”

Even sophisticated Wall Street investors have joined the sing-along, given that bank stocks are once again on the rise.

As of this morning, shares of financially uncertain banks with enormous unrealized losses are now trading at fairly rich, double-digit valuations as measured by Price/Earnings and Price/Free Cash Flow metrics.

(Meanwhile, valuations of high quality, well-managed real asset businesses in the energy, mining, agriculture, and productive technology sectors are tiny by comparison.)

Everyone seems happy to close their eyes and pretend that the crisis is over despite so much evidence to the contrary.

To your freedom, Simon Black, Founder  Sovereign Man

https://www.sovereignman.com/trends/i-love-how-everyone-pretends-the-bank-crisis-is-over-146615/

How The Glorification Of Struggle Is Both A Symptom And Cause Of Financial Trauma

How The Glorification Of Struggle Is Both A Symptom And Cause Of Financial Trauma

Addressing the "Got It Out The Mud" Mindset  Rahkim Sabree  Mar 17

Recently I was asked for feedback on the ‘got it out the mud’ mindset and how that ties into financial trauma.

See nepotism: - nep·o·tism - the practice among those with power or influence of favoring relatives, friends, or associates, especially by giving them jobs.

Somehow the devaluing of credibility, experience, and expertise of others is easier when we know that they had help. We hear the stories of those who received a loan, an inheritance, or were put in a position to be successful via education or some role at a company.

My story is not unique. The odds in so many instances have been statistically against me.

I’m the product of two teenage parents

I grew up experiencing poverty

My parents didn’t have a college education

I was less than one degree of separation from gang violence

So when *I* discuss poverty and overcoming, I’m telling the story of my life not to glorify it, but to demonstrate what’s possible for someone to beat those odds. But my success is also tied into a lot of sacrifice, pain, sometimes resentment, and a pressure to perform for myself, my family, and my greater community at large. It’s also the result of an intangible or spiritual form of nepotism where relatives, friends, associates, teachers, coaches, etc. have breathed life into me, my potential, and my dreams.

Although I may joke with a line from the famous Drake song “I started from the bottom now I’m here,” there never truly was a bottom for me to start from as I stand on the shoulders of those who sacrificed and came before me. I don’t believe anyone is truly self made, some just apply what is it they were given in different ways.

Status Does Not Equal Wealth

When we look at this fascination with achieving status we tend to automatically assume that someone is doing well financially. They make an effort to be seen—in designer, in the foreign cars, on vacation to exotic locations, drinking expensive alcohol, etc. The portrayal of success via these elaborate demonstrations become exponentially more impressive when tied into this narrative of having started from nothing or ‘getting it out of the mud’, which can entice onlookers to wonder what did they do to get all of that?

It feeds a fantasy lifestyle that also makes those onlookers prime targets for being taken advantage of through the lifestyle marketing into doing whatever needs to be done to make that fantasy a reality.

Behind the scenes however, that status may not be tied into real wealth—that is, wealth already present. The wealth comes from those who will willingly hand over their own money to fund these lavish lifestyles in an attempt to emulate or achieve them for themselves.

The Nepotism Baby

Curiously, those who didn’t necessarily start from the bottom are met with a sort of disdain. They are deemed “unrelatable” and terms like “trust fund baby” or “born with a silver spoon” are used as insults rather than celebratory feats.

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

https://rahkimsabree.substack.com/p/how-the-glorification-of-struggle?fbclid=IwAR1GnAyq7JUnwKtzFDc11R9S2Xh-Xcc-6kltyW-zKn57YESPmOtjfVlxSy4

New IRS Report Provides Fascinating Glimpse Into Your “Fair Share”

New IRS Report Provides Fascinating Glimpse Into Your “Fair Share”

March 28, 2023  Simon Black, Founder  Sovereign Man

Every year the IRS publishes a detailed report on the taxes it collects. And the statistics are REALLY interesting.  A few weeks ago the agency released its most recent report. So this is the most objective, up-to-date information that exists about taxes in America..

This is important, because, these days, it’s common to hear progressive politicians and woke mobsters calling for higher income earners and wealthier Americans to pay their “fair share” of taxes. But this report, directly from the US agency whose job it is to tax Americans, shows the truth:

The top 1% of US taxpayers paid 48% of total US income taxes.

And that’s just at the federal level, not even counting how much of the the local and state taxes the wealthy paid.

Further, the top 10% paid nearly 72% of total income taxes.

Meanwhile, the bottom 40% of US income tax filers paid no net income tax at all. And the next group, those making between $30-$50,000 per year, paid an effective rate of just 1.9%.

(Again, this is not some wild conspiracy theory; these numbers are directly from IRS data.)

But the fact that 10% of the taxpayers foot nearly three-fourths of the tax bill still isn’t enough for the progressive mob. They want even more.

The guy who shakes hands with thin air, for example, recently announced that he wants to introduce a new law that would create a minimum tax of 25% on the highest income earners.

But the government’s own statistics show that the highest income earners in America— those earning more than $10 million annually— paid an average tax rate of 25.5%. That’s higher than Mr. Biden’s 25% minimum.

So he is essentially proposing an unnecessary solution in search of a problem.

I bring this up because whenever you hear the leftist Bolsheviks in government and media talking about “fair share”, they always leave out what exactly the “fair share” is.

The top 1% already pay nearly half the taxes. Exactly how much more will be enough?

Should the top 1% pay 60% of all taxes? 80%? At what point will it be enough?

They never say. They’ll never commit to a number. They just keep expanding their scope.

Elizabeth Warren, for example, quite famously stopped talking about the “top 1%” and started whining about the “top 5%”. And then the “top 10%”.

She has already decided that the top 5% of wealthy households should not be eligible for student loan forgiveness or Medicare.

And when she talks about “accountable capitalism” on her website, Warren calls out the top 10% for having too much wealth, compared to the rest of households.

Soon enough it will be the “top 25%” who are the real problem...

Honestly this whole way of thinking reminds me of Anthony “the Science” Fauci’s pandemic logic on lockdowns and mask mandates.

You probably remember how reporters always asked “the Science” when life could go back to normal... and he always replied that it was a function of vaccine uptake, i.e. whenever enough Americans were vaccinated.

But then he kept moving the goal posts. 50%. 60%. 70%. It was never enough. And there was never a concrete answer.

This same logic applies to what the “experts” believe is the “fair share” of taxes which the top whatever percent should pay.

They’ll never actually say what the fair share is. But my guess is that they won’t stop until 100% of taxes are paid by the top 10% ... and the other 100% of taxes are paid by the other 90%.

To your freedom,   Simon Black, Founder  Sovereign Man

https://www.sovereignman.com/tax/new-irs-report-provides-fascinating-glimpse-into-your-fair-share-146597/

Nearly Half of Americans Haven’t Written a Check in the Past Year

Nearly Half of Americans Haven’t Written a Check in the Past Year — Why More Should Follow Their Lead

March 28, 2023  GoBankingRates

When was the last time you wrote a check?

In a new survey from GOBankingRates polling 1,000 Americans, 44.5% of respondents revealed they have not written a physical check in the past year. While this percentage may seem quite high, many are still using their checkbooks on an active basis. For instance, 15% said they write a few checks a month and 22% write a check once a month.

In an increasingly digital world where we rely on automatic payments, we may wonder if writing checks will become obsolete. For those who still need them, though, checks are a vital part of their financial lives.

Still, writing checks comes with a number of issues that suggest doing away with the process could be a good thing. Consider some of these risks associated with check-writing — courtesy of Todd Christensen, education manager at Debt Reduction Services.

Checks Can Reveal Too Much Information

For the most part, people who write a physical check and give it to a recipient — like a contractor or their landlord — are trusting this individual with the payment amount and personal information printed on the check. What many often do not consider is how much confidential information is also on there.

“Every check they’ve ever written has their checking account number and their financial institution’s routing number out in the open for anyone to see,” said Christensen.

In the wrong hands, or in situations where the check is not cashed quickly enough, this could lead to identity theft.

Checks Can Get Lost

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

https://www.gobankingrates.com/banking/checking-account/nearly-half-of-americans-havent-written-check-in-past-year-risks/?utm_term=related_link_3&utm_campaign=1216886&utm_source=yahoo.com&utm_content=4&utm_medium=rss

5 Reasons You Still Need Checks

5 Reasons You Still Need Checks

Heather Taylor   Mon, March 27, 2023

Is there still room for paper checks in a world where financial transactions are increasingly digital in nature? Survey says … yes.

In GOBankingRates’ Best Banks 2023 survey of 1,000 Americans, 22% of respondents said they still write checks at least once a month. And surprisingly, of these respondents, the largest percentage belonged to those between the ages of 18 to 24 (28%). Paper checks might sound like a mildly antiquated concept, but they can still be used to fulfill specific needs now and into the near future.

Here are some of the key reasons you still need checks.

Valid Form of Payment

If you don’t have cash or a credit or debit card available to pay for essential goods or services, many people and places will accept a check. Desiree Kaul, CFP and associate advisor at MainStreet Financial Planning, said you can still use a physical check to make a payment for the following:

Hiring contractors. Kaul said contractors who work on your home generally accept only cash or physical checks for their services. Paying with a credit card, should you choose to do it, may mean paying additional convenience fees.

School fees. Families with school-aged children often need to pay for various activities throughout the course of the school year. Rather than send your child to school with cash that could be lost, Kaul said it may be easier to write a physical check for fees payable to the school.

Physical magazine subscriptions. If you still subscribe to physical magazines, Kaul said you may want to pay for these subscriptions via physical check. “If you use a credit card, some companies will autobill a credit card upon renewal whether you intended to renew or not,” said Kaul.

Groceries. Yes, many grocery stores and retailers like Walmart will accept a physical check at checkout. Kaul said this can be especially helpful in circumstances where your debit or credit card has been lost or stolen. A physical check may act as its replacement for making payments until then.

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