DINARRECAPS8 6/29/24 DINARRECAPS8 6/29/24

25 Things You Should Never Do With Your Money

Roger Wohlner Sat, June 29, 2024

Do enough digging and you’ll find that there is possibly an endless list of things you shouldn’t do with your money. From bad habits to decisions based on wishful thinking, some of the bigger missteps can really cost you.

To find out the biggest money mistakes you should avoid, GOBankingRates asked financial experts for their best advice.

Never Cash Your Paycheck Right Away

If you cash your paycheck right away, you might burn through it too quickly.

“You will most certainly spend it all if you cash your paycheck rather than have your employer directly deposit it into your bank account,” said Barbara Friedberg, a personal finance consultant. “Even better is to automatically transfer a percent of your paycheck into a retirement investment account and direct-deposit the remainder into a bank account.”

One advantage of having a workplace retirement plan, such as a 401(k), is that money is automatically deducted from your pay and invested. You don’t see it, so you won’t spend it. You can use a budgeting template to get the most mileage out of your paycheck.

Never Fall For ‘Special’ Finance Deals You Can’t Afford

25 Things You Should Never Do With Your Money

Roger Wohlner Sat, June 29, 2024

To find out the biggest money mistakes you should avoid, GOBankingRates asked financial experts for their best advice.

Never Cash Your Paycheck Right Away

If you cash your paycheck right away, you might burn through it too quickly.

Never Fall For ‘Special’ Finance Deals You Can’t Afford

Promotional finance offers that provide zero or low interest rates on a big purchase might sound like a great deal — until you wind up paying more than you expected. That’s what happened to Grayson Bell, founder of personal finance website Debt Roundup.

“Don’t finance a new vehicle, or watercraft in my case, based on the low promotional monthly payment,” he said. “I financed a new $10,000 Jet Ski with no money down and no real way to pay for it based on a radio ad promoting a super low $69 per month payment. What I didn’t read was the rate was only for two years, then it changes to include retroactive interest based on the loan amount.”

“Those financing deals can ruin you if you’re only looking at the monthly payment,” he continued. “Go through the math and read all of the fine print. They get you in with the low monthly payments, but keep you paying for much longer than you anticipated.”

Never Co-Sign a Loan You Can’t Afford

Michelle Schroeder-Gardner of personal finance blog Making Sense of Cents said you should never co-sign on a loan for someone unless you have the means to pay it back fully.

“The fact is that you never know if the person will be able to pay every single payment, so it’s best to prepare yourself,” she said.

Never Live Above Your Means

One of the tenets of building wealth is to live below your means. Saving and investing should be your priorities so you can help pay for your children’s college costs and live comfortably in retirement, said Cathy Curtis, a certified financial planner and author of “The Happiness Spreadsheet: How To Create A Budget Aligned with Your Values, Beliefs and Ideals.”

Never Rely Only on Cash When Traveling

Sure, carrying and using cash is a good alternative to running up credit card bills. But Curtis suggested using traveler’s checks or credit cards as an alternative to cash.

Holding substantial cash when you’re traveling can invite unfortunate situations. You could lose it or be a victim of theft, which is not uncommon in certain tourist areas.

DINARRECAPS8 6/29/24 DINARRECAPS8 6/29/24

I Grew Up Rich: 6 Money Lessons I Wish My Parents Would Have Taught Me

Cindy Lamothe Fri, June 28, 2024 a

There’s no doubt that being born with a silver spoon in your mouth gives you a leg up in the world — but it can also have its downsides, financially speaking.

Growing up rich has many perks, but it can also hinder a person from learning essential money lessons.

GOBankingRates spoke with people who come from privilege but recognize their upbringing didn’t equip them with the necessary financial skills to set them up for long-term success. Read below for their insights on money lessons they wish they had learned.

Appreciating the Value of Money

“Having grown up in a wealthy family and now working for my own business, I have unique insights into the financial lessons often missed when money is readily available,” said Ben Hilton, founder and managing director of Switch Jam Digital.

I Grew Up Rich: 6 Money Lessons I Wish My Parents Would Have Taught Me

Cindy Lamothe Fri, June 28, 2024 a

There’s no doubt that being born with a silver spoon in your mouth gives you a leg up in the world — but it can also have its downsides, financially speaking.

Growing up rich has many perks, but it can also hinder a person from learning essential money lessons.

Appreciating the Value of Money

“I never felt the need to worry about money as a child, and therefore, I failed to understand its real value. I now wish that someone had inculcated in me an appreciation of the actual work that goes into making money,” he said. “For instance, why did someone waste hours in the pursuit of a better deal or draw up a stringent budget? If I had known better the value of money, perhaps I would have been more enlightened about money management and spending habits.”

Budgeting Skills and Money Management

“I didn’t have to budget because it wasn’t expected or required in my home, and I’m still unaware of how to properly maintain a budget,” Hilton said. “When I first left home and lived alone, I struggled to balance my expenses and income.”

He noted that making sure a person knows how to set up and maintain a budget is a rather important skill that prevents overspending and helps to uphold and support personal financial stability.

Nischay Rawal, CPA, founder and managing partner of NR Tax & Consulting, shared a similar experience.

“Growing up with wealthy parents, I never learned the value of a dollar or what it meant to budget,” he said. “Money was always there for whatever I needed or wanted. As a result, I didn’t develop key financial skills that most people gain from an early age.

“When I started my own business, I had no idea how to forecast expenses, set financial goals or manage cash flow,” Rawal explained. “The first few years were a crash course in Finance 101. I made many mistakes that could have been avoided if I had a better grasp of basic money management.”

Investing Wisely

“While I had the money, I never learned how to invest early. I lost the basis for generating wealth through investment,” Hilton said. “A clear illustration of this is the fact that I was unaware of compound interest when I was 20 years old, a knowledge that could have significantly increased my financial worth.”

Learning investment principles and how to build wealth is crucial, according to Hilton. “How to invest wisely is a critical lesson for long-term financial growth,” he said.

Financial Independence

“Financial security during childhood is typically already wealth-dependent,” Hilton said. “I wish somebody had taught me about financial independence very early. For instance, in the early days of my career, it became easy to reach out to family for money and support instead of struggling and fighting to succeed financially independently.”

DINARRECAPS8 6/28/24 DINARRECAPS8 6/28/24

How To Achieve Financial Freedom: 9 Steps Towards Financial Independence

Sheiresa McRae Ngo Thu, June 27, 2024 Bankrate

If you’re like many people, you dream about reaching a point where you don’t have to worry about money, and you can quit your 9-to-5. According to Bankrate’s recent Financial Success Survey, 41 percent of Americans would consider themselves financially successful when they never worry about their finances.

Most Americans say they wouldn’t feel secure until they’ve made at least $233,000 a year, according to Bankrate’s Financial Freedom Survey. To feel rich and financially free, Americans said they would need to earn an average of $483,000 a year.

Fortunately, it’s possible to achieve financial freedom. With careful planning, disciplined savings and wise investments, you can reach your goal. Here’s how you can become financially independent.

How To Achieve Financial Freedom: 9 Steps Towards Financial Independence

Sheiresa McRae Ngo Thu, June 27, 2024 Bankrate

What is financial freedom?

Financial freedom means different things to different people. Some define it as never having to work again, while others say being financially free means eliminating debt.

Among Bankrate’s Financial Success Survey, 19 percent of Americans say having enough money to quit working represents financial success while 41 percent say living without debt fulfills this goal.

“Financial freedom describes having enough wealth to live without having to work actively for necessities,” says Dennis Shirshikov, head of growth at gosummer.com and finance professor at the City University of New York. “It means having the means to afford the lifestyle you want for yourself and your family.”

“Achieving financial freedom allows you to make decisions that are not solely based on financial constraints,” Shirshikov adds. “For example, you can choose to pursue passions, hobbies or even career changes without worrying about the financial repercussions.”

What is the FIRE movement?

The Financial Independence, Retire Early (FIRE) movement is a lifestyle and financial strategy that aims to achieve financial independence and early retirement. The goal is to save and invest enough money to provide a sustainable income for the rest of one’s life, allowing for retirement at a much earlier age than the traditional retirement age.

FIRE gained attention after the publication of the book Your Money or Your Life by Vicki Robin and Joe Dominguez. The movement emphasizes assessing each purchase by analyzing the working hours needed to make the purchase.

Followers of the FIRE movement typically aim to save 50 percent to 70 percent of their annual income and plan to retire when their savings reaches around 30 times their yearly expenses, or roughly $1 million. Once retired, they make small annual withdrawals (usually around 3 percent to 4 percent) from their savings to cover living expenses.

“One would have to live significantly below their means and be aggressive when it comes to their asset allocations,” says Steven Charlton, certified financial fiduciary and founder of Wisdom Financial. “The FIRE movement can be utilized to find financial freedom by growing assets proportionately in order to be able to live off interest and dividends. This way you won’t have to live off the income when you decide to retire.”

How to create financial freedom

Achieving financial freedom involves careful discipline and planning. The following steps can help you reach this milestone.

To Read More:

Our writers and editors used an in-house natural language generation platform to assist with portions of this article, allowing them to focus on adding information that is uniquely helpful. The article was reviewed, fact-checked and edited by our editorial staff prior to publication.

https://www.yahoo.com/finance/news/achieve-financial-freedom-9-steps-175605001.html

DINARRECAPS8 6/27/24 DINARRECAPS8 6/27/24

100 Ways To Live a Rich Life in Retirement — Without Spending All of Your Savings

Preston Hartwick Tue, June 25, 2024

You may have more free time when you retire, but retirement certainly isn’t free.

Around half of retirees report that their overall spending is higher than they anticipated, according to the Employee Benefit Research Institute. At the same time, the top concern of retirees is that the increased cost of living is making it harder to save money.

Ideally, you’ll have started preparing for retirement well before you hit the magic number. But even if you haven’t saved as much money as you would have liked, there are a multitude of ways to make your savings last.

While you may not be able to eat out at fancy restaurants every night or take big vacations every year, you can still live a rich, fulfilling life on a modest budget. Being smart with your money and taking advantage of free activities and experiences are keys to maintaining a satisfying lifestyle and healthy bank account balance.

100 Ways To Live a Rich Life in Retirement — Without Spending All of Your Savings

Preston Hartwick Tue, June 25, 2024

You may have more free time when you retire, but retirement certainly isn’t free.

Design Your Ideal Lifestyle

Before you make all the small decisions that will affect your quality of life in retirement, you need to take a step back and think about the big picture. How would you design your ideal life, within reason, given your current finances?

How do you envision your post-working life? Is it filled with new experiences, activities and travel to exotic locations? Or is it simpler, quieter and closer to home? Do you dream of moving to a sunnier climate, or would you want to downsize to a smaller house?

You don’t have to stick to your initial vision forever, but it’s helpful to think through your standard of living before planning your budget, as it will inform your purchasing decisions and lifestyle choices.

Know the 4% Rule

One common calculation for estimating how much money you’ll need in retirement is known as the 4% rule. This generalized guideline suggests that you should spend roughly 4% of your retirement savings every year if you expect your savings to last 30 years.

For example, if you have a retirement fund of $750,000, you could take out $30,000 as your budget for the first year. The next year, multiply that $30,000 by the inflation rate to find your annual budget.

Of course, this is more of a suggestion than a rule. Your individual circumstances will vary, but you can use this calculation as a starting point for thinking about your retirement budget.

Make a Budget and Stick to It

Budgeting is the key to saving money. Start by listing groceries, rent, insurance, utilities and other essentials. Then, review your past spending to see how much you typically spend on other expenses. Don’t forget to factor in taxes and annual inflation rates, and include room in the budget for fun and relaxation.

Currently, Social Security retirement benefits average $1,867 per month. Calculate how this will impact your budget and see whether you can cut down spending in nonessential areas.

Trick Your Mind Into Saving by Paying Yourself a Salary

DINARRECAPS8 6/27/24 DINARRECAPS8 6/27/24

7 Things You Must Do When You Start Making 6 Figures

Heather Taylor Wed, June 26, 2024

Once your salary reaches $100,000, you need to take certain steps to ensure you keep building wealth and stay in good financial health.

There’s a chance you already might be making some of these money moves, even if you’re earning a little less. Make sure you start taking these actions as soon as you begin earning $100,000.

7 Things You Must Do When You Start Making 6 Figures

Heather Taylor Wed, June 26, 2024

Once your salary reaches $100,000, you need to take certain steps to ensure you keep building wealth and stay in good financial health.

There’s a chance you already might be making some of these money moves, even if you’re earning a little less. Make sure you start taking these actions as soon as you begin earning $100,000.

`1. Eliminate High-Interest Debt

Those who just started earning six-figure incomes will need to quickly pay off any high-interest debt. Think student loans, credit card balances or any other outstanding debt where the interest rate is extremely high.

Alissa Krasner Maizes, financial planner and founder of Amplify My Wealth, said eliminating this debt yields the quickest return on investment. Not sure where to begin? Krasner Maizes recommends automating monthly payments beyond the required minimum payment due.

Start with your highest-interest debt and, once you eliminate this debt, move on to paying off debt with the next highest amount of interest. Keep going until you have paid off all high-interest debt — and find yourself debt-free.

2. Maximize Retirement Contributions

Once you have cleared any outstanding debt, Krasner Maizes recommends maximizing your retirement contributions. Those earning a six-figure income should contribute the amount their employer matches for their retirement account.

“Ideally, maximize your contributions to tax-advantaged retirement accounts and consider the advantages of a Roth option as you will pay tax now,” Krasner Maizes said. “As long as you follow the necessary rules, you will not pay taxes on the growth or when you withdraw the money for retirement.”

3. Create a Holistic Financial Plan

When you start earning six figures, it’s a good idea to make sure you have a solid plan in place for your future. There are free financial tools you can use to help ensure your money is well-managed and invested.

A financial services company called Empower has free tools that let you check your net worth, plan your savings and retirement and do a checkup on your investments. It also offers professional wealth management and various investment products.

Its portfolio analyzer lets you assess your overall risk, analyze past performances and model individualized asset allocations. There’s also a free investment-return calculator that estimates how much money you can earn over time, based on the amount of money you invest and the expected rate of return.

If you’re trying to develop a long-term plan for your money, this is a good place to start. You’ll learn how much money you really have, how much you should be saving, make sure you’re properly invested and gauge where you’re at in your retirement-savings journey.

DINARRECAPS8 6/27/24 DINARRECAPS8 6/27/24

7 Things You Should Never Do in Retirement

Adam Palasciano Tue, June 25, 2024

Retirement: A magical time of life when you no longer (necessarily) have to work for your money. Instead, decades of hard work coupled with saving and smart investments should mean that your money now works for you.

Careful financial planning can certainly lead you to this outcome. However, there are several things you’ll want to street clear of to ensure that you don’t end up in financial trouble after you call it quits at work.

Here are seven things you’ll want to seriously avoid if you’re approaching retirement or you’re already retired, according to Ameriprise and Think Bank.

7 Things You Should Never Do in Retirement

Adam Palasciano Tue, June 25, 2024

Here are seven things you’ll want to seriously avoid if you’re approaching retirement or you’re already retired, according to Ameriprise and Think Bank.

1. Retiring Too Early

Deciding to stop work too early can have long-term implications on how long your money will last you. If it’s clear that you don’t have enough money saved, consider working for a few more years to augment your retirement savings. As a general rule of thumb, it’s important to save at least 15% of your annual income toward retirement throughout your working life — or more, if you can.

2. Overspending

Many people find themselves on a reduced or fixed income in retirement. So, it’s really important to make sure you’re not overspending. Creating a clear budget can help you track where your money is being spent each month, ensure you’re not living above your means, and help you stay out of debt.

3. Taking Social Security Too Early

It’s possible to collect Social Security as early as age 62. However, you’ll only be eligible for a portion of your maximum monthly benefit by doing so. The longer you wait to collect Social Security, the larger your monthly payment will be for life. So, waiting longer can have huge long-term impacts on your cash flow and financial stability.

4. Underestimating Effects of Inflation

You won’t be immune to the effects of inflation just because you’re retired. It’s crucial to consider how even low levels of inflation ranging from 1-2% can erode your purchasing power. It’s best to consult a financial advisor to devise an investment strategy that mitigates the effects of inflation once you’ve stopped working.

5. Underestimating Medical Expenses

DINARRECAPS8 6/26/24 DINARRECAPS8 6/26/24

Ex-Millionaires Are Revealing How They Lost All Their Money, And I'm Actually Speechless

BuzzFeed Tue, June 25, 2024

Reaching millionaire status is a feat people dream of achieving. But unfortunately, having millions of dollars doesn't mean you're invincible, as evidenced by redditor u/HypnoticMushrooms, who asked people to share how they or someone they knew became an "ex-millionaire." I'm genuinely surprised at how some of these people weren't responsible with their money. Here are some of the most insightful stories:

1."COVID-19. I built a business that was given a valuation of a few million back in January, but the industry went down, and I'm doing all I can now to avoid bankruptcy."

Ex-Millionaires Are Revealing How They Lost All Their Money, And I'm Actually Speechless

BuzzFeed Tue, June 25, 2024

1."COVID-19. I built a business that was given a valuation of a few million back in January, but the industry went down, and I'm doing all I can now to avoid bankruptcy."

2."I dated a guy who unexpectedly inherited $6 million. His parents had been killed in a drunk driving accident when he was a baby, and so their life insurance and money from a legal settlement sat in an account collecting interest for 18 years. He got a call from a lawyer on his 18th birthday, and that's how he found out about it. He went nuts. Every time I saw him, he had a new car.

He bought an extravagant house and insisted on taking these big vacations. He would go to our local comic shop and buy EVERYTHING. His spending was a major factor in why we broke up. It was all too much, watching him blow through money like that. He didn't invest any of it. He blew through all his money in five years. Last I saw him on Facebook, he was destitute."

3."I built a business worth around $3 million, had a house worth $1.4 million, investments worth more than $2 million, and had four nice cars. Divorce laid me low. An ex-wife, a lawyer, and a judge stripped me of at least 75% of that. I was left with a Miata race car, a bit of money, and 51% of my company.

And I still had to pay alimony. I gave up. I negotiated my way out of alimony by giving up more of the company and liquidating everything else.

I bought a boat and fucked off. 26 months later, I sailed back into my life and started over. I've earned enough to live a modest retirement, and that's where I am today. Don't get married, boys. I've done it twice. The first time was a disaster, and the second time was an annoyance. Just my opinion and experience."

4."A family member of mine did very well in tech. He was an incredibly smart physicist but a horrible businessman. He retired, having made his millions, then bought a beautiful antique yacht. 10 years later, he's in debt and has struggled to sell the boat for years. His family is so pissed at him. TL;DR: don't buy a boat.

5."I was close to being a millionaire after selling my company to a bigger competitor. I reinvested most of it since I didn't have much use for the money, but then I got scammed for about half a million on buying some real estate.

I basically bought a fantastic holiday destination facility from someone who did not own said fantastic holiday destination facility. And by 'bought,' I mean that I'd put a substantial down payment to keep other interested parties at bay. Classic."

6."My grandfather died and left everything to my mom. Then, my father died and left everything to my mom. Mom always thought she was a smart gambler that would win. As proof, she won maybe $25k from the lottery once and went out and bought a car. After that, she was hooked. When Dad was alive, he didn't let her gamble; he kept it under control. After he died, my mom found a boyfriend — a former bookie who was a 'professional' gambler.

They used to like going to casinos, squandering every penny and more. Then, my mom sold the big house for another $500k and bought a small condo. She took out a home improvement loan for it for $50k, but no improvements were ever made. Casinos and lottery tickets. A cool million or two gone."

DINARRECAPS8 6/25/24 DINARRECAPS8 6/25/24

I’m a Wealthy Millennial: 4 Financial Skills I’m Passing Down to My Children

Heather Taylor Mon, June 24, 2024

Gen Alpha, and future generations to come, may be on track to receive the financial literacy they deserve.

A new study from Bank of America titled the “2024 Study of Wealthy Americans” reveals emerging trends around generational wealth and its influence on financial strategies. Data from the 2024 quantitative survey shows that 48% of wealthy Americans said they would initiate the conversation when it comes to teaching their children or heirs financial skills.

What kinds of financial skills are wealthy Americans planning to pass down to their children or heirs? GOBankingRates spoke to Dave Fortin, the millennial co-founder of investing app FutureMoney and a new dad, to learn more about the financial skills he plans to pass down to his children.

I’m a Wealthy Millennial: 4 Financial Skills I’m Passing Down to My Children

Heather Taylor Mon, June 24, 2024

Gen Alpha, and future generations to come, may be on track to receive the financial literacy they deserve.

Delayed Gratification

In March 2024, GOBankingRates surveyed 1,008 American adults on a series of questions related to financial literacy. When asked about the poor money habits they learned from childhood, 36% of respondents said they picked up impulse shopping.

This won’t be the case for Fortin. He told GOBankingRates he plans to talk to his kids about delayed gratification. Beyond avoiding impulse purchases, it’s a lesson that will help his children in many other aspects of their lives.

“By using the language of money, you can show your kids the advantages of saving today for something in the future, and how your money can grow,” said Fortin.ughh

Goal Setting

Another skill Fortin plans to teach his children is how to set goals, which he considers to be important in money and in life.

Learning how to set a goal — whether this is a goal towards going to college, buying a car or purchasing your first home — is only one part of the equation, according to Fortin. He added that it’s important for children to learn how to create a plan that will help them achieve the goal.

Being Good Stewards of Capital

Fortin’s list of financial skills he plans to teach his children include comparing income and expenses, understanding taxes, basic banking products and basic investing principles. Many of these skills are confusing to adults, especially those who lack the proper financial literacy background. As an example, nearly 17% of Americans surveyed by GOBankingRates in March 2024 said they didn’t clearly understand how taxes work.

DINARRECAPS8 6/24/24 DINARRECAPS8 6/24/24

I’m a Self-Made Millionaire but Received No Formal Financial Education – 5 Resources I Used To Teach Myself

Brooke Barley Mon, June 24, 2024

Did you know that there are 24.5 million millionaires in the United States? That means every 7 out of 100 people have millions in wealth at their disposal. How can you become one of them?

You might think that to amass a million dollars, you have to go to the right schools, take the right internships and get in on the ground floor somewhere right after college. That’s one path, but it’s not one that everyone takes. Some millionaires never take one business course at a university and still end up with a fortune.

I’m a self-made millionaire who received no financial training,” Stan Dzhishkaryani said. Despite no financial training, Dzhishkaryani is the founder and CEO of DZ Moving, a moving and logistics management company. “My financial acumen was based a lot on making lifestyle adjustments such as living a minimalist lifestyle and prioritizing health, which made a big difference.”

I’m a Self-Made Millionaire but Received No Formal Financial Education – 5 Resources I Used To Teach Myself

Brooke Barley Mon, June 24, 2024

Did you know that there are 24.5 million millionaires in the United States? That means every 7 out of 100 people have millions in wealth at their disposal. How can you become one of them?

1. Read Financial Texts

If you’re looking to grow your net worth, you don’t necessarily need to enroll at a business school. Your path to wealth can be as simple as going to the library.

Arvind Rongala didn’t have any financial education in a formal setting, but he is now the CEO of Edstellar, a company that provides corporate training solutions. Rongala said that he expanded his business knowledge by reading financial texts.

“When I first started, I lacked official financial knowledge, but I used several tools to learn. Personal financial, investment and entrepreneurial books were gems. For instance, reading books like ‘Rich Dad Poor Dad’ by Robert Kiyosaki and ‘The Intelligent Investor’ by Benjamin Graham taught me a lot.”

Other popular books for financial literacy include ‘The Richest Man in Babylon’ by George S. Clason, ‘Your Money or Your Life’ by Vicki Robin & Joe Dominguez, and ‘The Simple Path to Wealth’ by J.L. Collins.

Though Rongala didn’t knock formal schooling, he says teaching yourself offers the freedom you might not have in a school setting. “Self-teaching gives flexibility and [you can] be just as successful if one is dedicated and creative.”

You can focus on growing your business while absorbing the essential information to improve.

2. Check Out Online Courses

Even if you don’t have the money to enroll in college courses, you can still get so much from taking an online class. Kevin McLaughlin started his own contracting business Heritage Exteriors LLC. To do that, he looked for resources online that catered to his line of work to learn everything he could.

“Online resources and industry publications became critical as my business grew. For instance, to stay updated on best practices and new products, I frequently visited websites like the National Roofing Contractors Association (NRCA). I also spent many hours reading trade magazines such as ‘Roofing Contractor’ and ‘Qualified Remodeler,’ which provided actionable insights and real-world case studies.”

Rongala agreed with McLaughlin, saying there are plenty of websites now that offer courses in pretty much any field you’re looking to learn more about. “Websites like Coursera provide excellent free courses on company management and financial literacy.”

DINARRECAPS8 6/24/24 DINARRECAPS8 6/24/24

The US Debt Is Near $1,000,000 Per American: Where the Money Went and Why It Matters to You

J. Arky Sat, June 22, 2024 GoBankingRates

America has a problem: We, as a country, are in a massive money hole. It’s one of many issues the nation is currently facing and attempting to figure out a solution forward. While many nations frequently struggle to maintain balance in a financial standing with lenders and other countries, the United States is facing a staggering number of $1,000,000 worth of debt per citizen.

In March 2024, CNBC reported that America’s national debt “…permanently crossed over to $34 trillion on Jan. 4, after briefly crossing the mark on Dec. 29, according to data from the U.S. Department of the Treasury. It reached $33 trillion on Sept. 15, 2023, and $32 trillion on June 15, 2023, hitting this accelerated pace. Before that, the $1 trillion move higher from $31 trillion took about eight months. U.S. debt, which is the amount of money the federal government borrows to cover operating expenses, now stands at nearly $34.4 trillion.”

The US Debt Is Near $1,000,000 Per American: Where the Money Went and Why It Matters to You

J. Arky Sat, June 22, 2024 GoBankingRates

That is a lot of money and there are not a lot of clear answers as to how to pay it off. Even in an advanced country, which is often seen as the richest and most powerful nation in the world, the path to wiping the slate clean and going back to zero remains murky at best. So where did all this debt come from and how is it going to impact you as a citizen of the United States? GOBankingRates checked in with a few economists to find out.

How Did We Get Here?

“The U.S. national debt reaching nearly $1,000,000 per American can be a startling figure, but it is essential to break down where this debt comes from and its implications,” said Dennis Shirshikov, a finance professor at the City University of New York.

Shirshikov defined the national debt as the total amount of money that the U.S. federal government owes to creditors, which range from financial institutions, private investors and other lenders across international lines.

“It comprises both public debt, owed to foreign and domestic investors, and intragovernmental holdings, such as Social Security and Medicare trust funds,” Shirshikov explained. “The debt has accumulated over decades due to persistent budget deficits, where government expenditures surpass revenues.”

The rise of high-interest consumer credit options played a huge role for the current balance facing Americans, according to Michael Schmied, senior financial analyst at Kredite Schweiz, who specifically highlighted the role of credit cards, personal loans and those tempting buy-now-pay-later offers as contributors to the nation’s debt.

“They make borrowing money way too easy — and often come with sky-high interest rates,” Schmied said. “This combo has led folks to rack up debt faster than they can pay it off, pushing the average debt per person up to almost $1 million.”

Where Did All This Money Go?

DINARRECAPS8 6/23/24 DINARRECAPS8 6/23/24

$15M Jackpot But Will Take Home Just $4.5M After Taxes

Ohio Woman Wins $15M Jackpot But Will Take Home Just $4.5M After Taxes — Did She Throw Money Down The Drain?

Bethan Moorcraft Sat, June 22, 2024

Lady Luck was present and accounted for when a woman from Sandusky, Ohio, won big in the state’s 50th Anniversary scratch-off game in June.

The winner, identified only as Jeanne, dropped to the floor when she realized she’d won a $15 million jackpot from a $50 scratch-off card, according to the Ohio Lottery Commission.

When she took the winning card to the clerk at Friendship #83 in Sandusky, they “both just cried,” Jeanne said in a press release. “There were people in line looking at me like I lost my mind.”

Jeanne had two options for how to claim her enormous prize: she could take an annuity of $600,000 for 25 years (which would total $15 million), or she could take a lump sum of about $7.5 million.

She opted for the $7.5 million cash option, a sum that will actually shrink to around $4.5 million, Moneywise estimates, once she’s paid her federal and state taxes.

That $10.5 million difference between the advertised $15 million prize and her eventual winnings begs the question, did she throw money down the drain by picking the lump sum?

Ohio Woman Wins $15M Jackpot But Will Take Home Just $4.5M After Taxes — Did She Throw Money Down The Drain?

Bethan Moorcraft Sat, June 22, 2024

Lady Luck was present and accounted for when a woman from Sandusky, Ohio, won big in the state’s 50th Anniversary scratch-off game in June.

The winner, identified only as Jeanne, dropped to the floor when she realized she’d won a $15 million jackpot from a $50 scratch-off card, according to the Ohio Lottery Commission.

Jeanne had two options for how to claim her enormous prize: she could take an annuity of $600,000 for 25 years (which would total $15 million), or she could take a lump sum of about $7.5 million.

She opted for the $7.5 million cash option, a sum that will actually shrink to around $4.5 million, Moneywise estimates, once she’s paid her federal and state taxes.

That $10.5 million difference between the advertised $15 million prize and her eventual winnings begs the question, did she throw money down the drain by picking the lump sum?

Taxing Mega Lottery Wins

The IRS requires all lottery agencies to withhold 24% of lottery winnings over $5,000 for federal taxes. On Jeanne’s $7.5 million purse, this amounts to tax of $1.8 million.

But as lottery winnings are taxed as ordinary income, a windfall of this size would land Jeanne in the highest federal income tax bracket of 37%, meaning she must progressively pay additional tax until she meets the bracket’s threshold. In the end, her total federal tax bill will land at around $2.73 million.

The Buckeye State also taxes lottery winnings like normal income. Jeanne’s $7.5 million lump sum win would place her firmly in the top state income tax bracket of 3.5% for 2024, which would eat approximately $262,000 from her total.

After all that, Jeanne’s total tax liability related to her win alone comes to about $3 million — meaning she’ll only get to enjoy around $4.5 million from her $50 scratch-off win (which is still a stunning return-on-investment).

She has big plans for her winnings. Jeanne says she wants to pay off her best friend’s mortgage, whom she’s stayed with for the past two years, and she’d love to buy a house in Florida.

But could she have achieved those goals and collected more money in the long-run by taking the annuity prize option?

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What If She Took The Annuity?