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Is It Smart To Use Your Retirement Money For Your Child’s Education?

golden egg with moneyDo you think that it is a smart move if you use your retirement money for your child’s education? After all, no parent would want to see their kid suffering financially. But does that really mean you need to sacrifice your future just so they can start their own future without any debt?

It is very hard to save for retirement when drowning in debt. That is a fact. So before you do the selfless act that comes naturally for parents, you may want to reconsider using up your retirement funds just to save your kid from student loans.

Although it is the noble thing to do, it may not be the smartest. According to an article published on, Boomerang kids are threatening to ruin their parent’s retirement. When they start moving back to the house or passing on the burden of paying off student debt to their parents, they are endangering the retirement of their folks. This report was taken from the market research done by Hearts & Wallets and shared with CNBC. According to this study, a lot of the parents of boomerang kids are postponing retirement just so they can help support their kid. And what is more troubling about this news is that those who are doing it is part of a big group. In fact, more than one-third of baby boomers provide financial support to their kids – that amounts to 15.8 million households. That is said to amount to $8 trillion worth of assets that could have been invested.

If you are seriously thinking about using your retirement money to help you child avoid debt, you may want to rethink your options first.

Should parents use their retirement fund to keep their child from student loans?

There is an article from that discusses this topic. According to the author, parents should not endanger their retirement money just so their kids will be spared. In fact, the article suggested that parents should start saving money early on to take advantage of the compound interest of some college savings funds. They can start early, save a little each month, and still have more than enough to help keep their kids from college debt when they are older. At the very least, this move will help put some money on the table to minimize the need to borrow money.

In our opinion, it is really not smart for parents to use their retirement money to fund the education of their child. So the answer to the title of this article is a big NO. There are two important reasons why parents should be encouraged to be a bit selfish when it comes to their retirement funds.

You deserve to give yourself a bright and comfortable future.

First of all, you really have to reward yourself for all the work that you have done and will still be doing in the future. You are not only working for your own needs, you have been supporting your child during the first 18 years of their life too. That is not an easy task considering the financial difficulties that everyone experienced in the past few years. Although parenthood requires sacrifice, there are some things that you also need to do for yourself. It is true that it is your responsibility to ensure that your child is equipped with the education that will help them support themselves financially in the future. But that does not mean you should choose between your future and theirs. If you want to be logical about it, there is more at stake with your future because you only have so much time to turn things around. You child still has a long way to go to pay up their student loans and save up enough retirement money. You do not have that luxury. That is why it is okay to be selfish by putting your retirement needs first before that of your child.

You need to teach your child how to pave their own way.

Another reason why you should not use your retirement savings to fund your child’s education is because you need to teach them to be responsible with their money. Times are hard. It is not like you are in abundance now. You need to let your child experience that reality. An article from finds fault in the way baby boomers practiced the concept of helicopter parenting. This means they try to micromanage the routine and behavior of their child. Their intentions are good because they only want to pave the way for their child to experience success. However, the methods used are not really teaching their children to own up to their lives. Too much sheltering will leave you with a child who will always be dependent on you. Do you really want that on your plate while you are retired? More importantly, can you really retire if your child continues to depend on you?

How to help with college finances without compromising your retirement savings

Of course, as a parent, you will not really leave your child without any help. You will assist them to ensure that they will not graduate from college drowning in debt. However, you need to think about how you can do that without compromising your own retirement money.

Here are a couple of tips that we have for you.

  • Guide your child in selecting the right loan. If you are not going to use your retirement funds to finance the education of your child, that means they would have to borrow student loans. There many options to get financial aid. You need to be patient and sit down with your child to discuss with them their options. Make sure that you research not just the type of loans that they can borrow, but the repayment options too. You need to make a decision on the loan based on how easy it will be to pay off in the future. In essence, educating them is more beneficial than using your retirement money.
  • Teach your child how to manage their money wisely. Once you have helped them select the right loan, the next lesson you need to teach them is money management. What they will learn from you will be something that they can carry with them until adulthood. When it comes to teaching your child about proper financial management, you can start with budgeting, saving and smart spending. You should discuss with them credit and how to manage it properly – especially if you will allow them to use credit cards.
  • Let your child work part time. Apart from teaching them how to manage their money, you should also encourage them to work part time. A college student has a lot of time in their hands – even those who have a full load. Help them seek out job opportunities so they can keep the need for loans to a minimum. If they can pay for their board and lodging plus daily needs, they only have to borrow money for their tuition. That will keep the student loan from being too burdensome. Not only that, they will learn how hard it is to earn money – that will teach them how to practice smart spending.
  • Split the expense with your child. Of course, you have the option to split the expense with your child. Choose a comfortable amount based on how much retirement money you have. When we say comfortable, it has to be an amount that you know you can replace before you retire. You can offer to pay for the tuition of your child for the first two years and then let them borrow or work for the money to pay for the rest.

Keeping your child from student debt problems is not really that hard. Sometimes, all you really need to do is to educate them to help them make smart decisions about their loans. It does not really require you to spend anything but you will be giving them something much more valuable – your time.

9 Tips For Spring Cleaning Your Personal Finances

Cleaning womanFor many of us spring just arrived – at least officially. We’re watching our lawns green up, thinking about having carpets cleaned and wondering when we’ll have time to clean those dirty windows. Now would also be a good time to think about your personal finances and what you could do in terms of spring-cleaning them. Here are nine tips that could help spruce them up, too.

#1. Revisit those credit card offers

The credit card companies are now hollering for business. One research firm has reported that the direct mail offers from credit card companies increased 12% between November and December. Did you receive one or more of these offers? Now might be a good time to apply for one, as the rewards offers are getting juicier. In fact, the credit card companies have been 25% more generous in handing out frequent-flyer miles, rewards points and sign up bonuses versus what they were offering just a year ago.

#2. Check out the new home financing options

The big quasi-governmental organizations Fannie Mae and Freddie Mac recently announced programs where you could put down as little as 3% when buying a home. The Federal Housing Agency requires as little as 3.5% down and recently lowered its annual mortgage premium. So if you’re thinking about buying a house now might be a good time to start shopping.

#3. Go cheap

There are some items were it doesn’t pay to be cheap such as toilet paper. However they’re other items where you can save a good deal by skimping. Grocery items are often marked way down when they near their sell-by dates. These can be perfectly okay so long as you either freeze or cook them right away. Inexpensive dishes and glassware will hold up just as well is the more costly ones. Plus, it hurts a lot less when you break a plate. Another place to save is on children’s clothes, as they will soon be outgrown anyway.

#4. Get your FICO score free

JP Morgan Chase, USAA, the State Employees’ Credit Union, Ally Financial, Discover and Bank of America are in the process of rolling out programs that will provide their customers with their FICO scores free. This is a monumental change because it will help you know your own creditworthiness, which is critical when it comes to applying for a loan or credit card. However, this is an area where it pays to be a bit careful as not all credit scores are created equal – even those that carry the FICO brand. But whichever you get should be close enough to your true FICO to know how potential lenders will view you.

#5. Move your money to an online savings account

The job market has approved this past year and gas prices dropped dramatically. If these have left you with some extra money you could save the best place to put it isn’t in a conventional bank or credit union savings account. These have an annual yield of around 0.0017% meaning that if you were to save $1000 you would earn just $1.70. But the online banks can generally offer higher interest rates and charge lower fees because they are not required to maintain brick-and-mortar branches. As an example of this MySavingsDirect and GE Capital Bank are currently offering 1.05%. While this may not change your life much it is certainly better than what you would get from your local bank.

Adult Woman#6. Get the credit card you want

We know that if you’ve been rejected for a credit card it can really sting. There are ways to maximize your chances of getting the cards you want and the most important is, of course, to maintain a high credit score. The way you do this is to pay your debts on time and carry as little debt as you possibly can. You should also space out your credit applications. You could call and ask for your application to be reconsidered if you have been rejected. Your creditor might send you a rejection letter explaining why you were rejected. In this case learn a lesson and take whatever steps would be required to remedy the problem. You can learn more information about raising your credit score by checking out this brief video.

#7. Consider leasing you next car

If you can pay cash for your car and keep it past your loan’s payoff date you will probably come out ahead financially. But if you are always shackled to a car payment because you trade in frequently, then leasing could be a good choice. You will have lower payments because you’re paying for the depreciation of the car only over the term of the lease. Also, the car will almost always be under warranty because most leases are for three years. As an example of what this could mean, if you were to lease a 2015 Chevy Malibu for three years you will come out $4000 ahead then if you were to buy the car with a five-year loan and then sell it after three years.

#8. Check out a HELOC

If you have equity in your home now could be a good time to tap it. It’s likely that the Fed will raise interest rates in the coming months and you might be able to get a HELOC or home equity line of credit with a good temporary fixed rate before any interest rate increase. While HELOCs generally have interest rates that fluctuate, some of the current offers have a fixed rate from 12 months to many years and this can be a way to save money if you plan to pay it back before the fixed-rate period ends. And it could be a good way to finance renovations to your home, to cover college tuition or to consolidate your credit card debts.

#9. Save money with free coupon apps

If you stayed away from using coupons because it all seemed too time-consuming then rejoice. It’s now as simple as swiping the screen on your smart phone. There are dozens of apps available that will help you compare prices, navigate sales and even get money back on some of the stuff you buy. ShopSavvy and RedLaser will let you scan an item’s barcode and then will tell you how much it costs at different online stores and if there are special deals available on the item at nearby stores. The app CouponSherpa includes coupons from hundreds of restaurants and retailers and RetailMeNot will alert you as to those stores near you that have coupons and deals available. PriceJump has a feature that will tell you precisely where you can find the best price on an item in each of three categories – Amazon, local and online.

Smart Credit Use: Should You Use Debt To Improve Your Home?

piggy bank in a houseSmart credit use does not necessarily mean you have to stop putting yourself through debt. Total elimination of debt is something that will really restrict you in terms of financial opportunities. There are certain financial improvements that are easier to achieve if you put yourself through debt. The most popular to this is buying your own home.

Buying a house is one of the most expensive spending that you will ever make. It cost hundreds of thousands of dollars to purchase. This is why most homebuyers can usually afford this purchase if they apply for a mortgage loan.

According to an article published on, the US housing is forecasted to gain steam in 2015. Thanks to the strengthening job market, more and more people are confident to borrow money just so they can buy their own home. This is one way for them to increase their personal net worth. If they wait to save up to buy a house in cash, it will take them forever to do so. In the meantime, they will be wasting their money paying rent. Instead of the monthly rent, it is more logical to just borrow money to buy your own home. The monthly amortization that you pay towards your mortgage increases your home equity. That means you get to increase your personal net worth as you pay off your mortgage loan. That is more preferable compared to the money that you will be wasting making your landlord rich.

But while putting yourself through debt to buy a house is acceptable, do you think the same is true with home improvements? Is it an example of smart credit use to borrow money so you can renovate your home to look at lot better? After all, to increase the value of your home you need to improve it every now and then. If the housing market is forecasted to improve this year and the next, you can really maximize the value of your home by doing a bit of improvement every now and then.

Survey shows that consumers plan to use debt for home improvement

According to a survey published on, 30% of homeowners who plan to improve their home would be using their credit cards. 59% said that they will tap into their savings. But some of the people who plan to use their savings are also thinking of using credit for a portion of their home renovations.

Do you think that these people are practicing smart credit use by borrowing money to improve their home? That probably depends on a couple of factors. If you are one of these people contemplating to borrow money just to renovate your home, look into these factors first.

Why do you want to improve your home?

Start by looking at the purpose of this home renovation. Do you plan to sell your home in the near future? With the improving housing market and the rising value of homes, any improvement that you will make could help you sell your property at a higher price. You can profit more from this transaction than when you leave it as is.

But if you simply want to improve your home because you want to make it more modern, you need to further scrutinize the specific renovations you will make. If the improvements will help insulate your home so you do not have to spend so much on utilities, then it might be justifiable. If you want to make your home more eco friendly and energy efficient, then borrowing may also be justified. But if you only want to increase your living space or improve the aesthetics of your home, then you should ask yourself other questions.

What is the status of your current debts?

This is the next question that you need to ask – what is the current status of your debts? Do you still owe a lot on your mortgage? If you only own a small percentage of your home equity, do you really think it is practicing smart credit use if you add more to that? And what about your credit card debt? How much do you owe your creditors? This is a high interest debt that you still need to pay off. If you want to use your credit card for the home improvement, that would add to the high interest balance that will burden you.

If your current debt is still high, you may want to find ways to keep your home improvements to a minimum. Or you can ask the next question.

Is your source of income stable?

If your income is currently struggling to pay off the debts that you owe, then that is a sign that you cannot take on more credit. Otherwise, it would be very difficult to pay off everything. You might end up really selling your house just because you got too much debt to your name. If ever you still have a lot of debts, you can be justified in borrowing more money as long as your income can still support the additional debt. That is how you practice smart credit use.

If none of the answers to these questions justify borrowing money, then you should postpone it or just save up for it.

Good and bad ways to use credit to improve your life published an article that says it is impossible to live debt-free. Apart from homes, the college education of children is hard to pay for in cash. While it is not impossible, a lot of households cannot afford to put their kids through college without the help of student loans.

While debt is unavoidable, that does not mean we should let it get out of hand. It is all about smart credit use.

One way for you to really implement it is to know the difference between good and bad debt. For those of you who got stung by too much debt during the Great Recession, it might be hard to believe that there is such a thing as good debt.

But there is such a thing as good debt. You need to know the difference between what is a good or a bad debt so you can make the right choices when it comes to your credit.

Good Debt

According to the CNN article, a good debt is something that you really need but cannot afford to pay in cash. At the very least, this is something that you cannot do without liquidating your assets and wiping out your cash reserves. Robert Kiyosaki defines good debt as something that puts money in your pocket. That means, the debt should lead you into a position that allows you to earn more money or increase your assets. This include mortgages, student loans and business debts. These three can help you put more money in your pocket.

Bad Debt

Robert Kiyosaki defines bad debt as something that will take money from your pocket. The CNN article identifies it as debt that you took to pay for things that are unnecessary and you cannot afford. These include credit card debts for designer clothes, accessories you can live without or that vacation that was clearly beyond your budget. You need to stay away from these debts because they will not really do you cany good to have. These could even drag you under if you are not careful.

Here is a video that simplifies what good and bad debts are.

In the end, smart credit use is not really about debt elimination. It is taking on debt that is necessary, improves your financial situation and you can afford to pay off.

Use Bulk Buying As One Of Your Saving Strategies At Home

woman with a full grocery shopping bagAre you in need of saving strategies for your household budget? Bulk buying may just be what you need to do.

It is a common practice for manufacturers to reduce the selling price of their products if consumers buy more of them. It is not a problem to lower the cost because most of the time, they save on the packaging of the product. This allows them to lower the price of the product if it is bought in bigger quantities. It is encouraging for consumers to buy things in bulk because they get to spend lower per unit. If you think about it mathematically, it is a great saving strategy.

Recently, there is more confidence when it comes to spending among Americans. According to an article published on, the beginning of this year showed a rise in household spending. It is said to be the fastest rise since 2006. This report came from the Commerce Department during the last week of January 2015. In truth, the article began by saying that consumers paused in spending during the fourth quarter of 2014 but it seems that it is regaining strength in 2015. This is thanks to the many jobs created in 2014 that increased the ability of consumers to spend on their household needs.

With that in mind, you will really understand why bulk buying seems like one of the appealing saving strategies at home. Since consumers have the capabilities to spend much at one point, they are opting to buy more at a lower price instead of deliberately limiting their consumption to save more.

However, you need to be careful about bulk buying because there are times when you end up wasting a lot of the products that you bought. That waste is not going to save you any money. Make sure that when you buy in bulk, it will all be used up before the product expires.

Thankfully, there are certain rules that consumers can follow so they can use bulk buying wisely. It still has potential to save money but you need to know how to approach it correctly.

Rules that will help you use bulk buying to save more

The truth is, the average American seems to be intent on spending more on groceries recently. According to an article published on, a Gallup poll showed that people admitted to paying more cash on groceries than they did in the past. It is not on bills or other subscriptions. Consumers are increasing their budget when it comes to their grocery shopping.

Whether that increase is because of bulk buying, it is not indicated in the report. But one can assume that if you will increase your grocery expense, bulk buying is one way to do that and you can also save in the process. At least, that is true if you follow these simple rules.

  1. Make sure you stay within the budget. Bulk buying will only bring you savings if you pay in cash for everything in your grocery shopping list. That means you do not go beyond your budget just to afford it. You will not use your credit card and pay only the minimum requirement. That goes against the goal of saving strategies. If you do have to use your card, make sure you are able to pay for everything in cash. This will take some getting used to but with some self-control, you should be able to get great bulk buying deals and still be within your grocery budget.
  2. Buy only what can be consumed in a month. This is the safest that you can estimate. But make sure you still check the expiration of the items you will buy in bulk. In truth, the best items for bulk buying are those that will not expire. Things like toilet paper, trash bags or kitchen paper towels can be bought in bulk without any worry. For household cleaning products, you may want to buy them in bulk but make sure to check the expiration. They do have expiration but it is usually a very long time. Frozen items usually last a month or so as well but try not to make them stay in your fridge for longer than that.
  3. Prepare your menu for the week for food bulk buying. Most food products can last for a week or more so this is a great way for your to buy in bulk. If you make your menu, you can plan to use the same ingredient that will allow you to buy more of it. When you buy more, it is may be easier for you to negotiate a lower price. You can plan a trip to the grocery store every weekend to make your purchase.
  4. Research the best deals. All saving strategies require a good amount of research. Do not think that just because something is packaged in a bigger box or container, it is immediately a good bargain. You have to make sure that you do your research before you make assumptions. Visit other stores or search for the price online. The product that you will buy should be less or equal to the average price that you will find in various stores. If buying a product in bulk will not give you any savings, then you may want to reconsider buying more than a piece.

What you have to realize is that bulk buying will not only help you save on the price per unit. It can also help you save on gas as you only make fewer trips to the grocery. Not to mention the time and effort that you can save – which is quite valuable still.

Other expenses at home that you can save on

Apart from the saving strategies that you can implement in your grocery shopping, there are other ways that you can spend less at home.

According to an article published on, everything today costs a little more than it did before. We have the inflation rate to thank for that. The article compared prices in 2015 and compared it to prices a century ago. A home used to cost only $3,200 and now the usual cost is $177,600. A car would only cost $2,005 in 1915 while in 2015, it costs $31,252 on an average. For food, if a person spends $3.51 on a meal in 2015, is only equivalent to 15 cents.

Given that, you know that in a couple of years, prices would rise once more and unfortunately, our wages are not as quick to increase with it. This is why you need to seriously contemplate practice smart spending at home. The good news is, there are a couple of things that you can do to lower your spending.

  • Inquire with service providers if you can bundle your current services. There are some providers who offer both Internet and cable subscriptions in one. These bundled services usually cost less than having two separate subscriptions.
  • Use coupons. This is one of the direct saving strategies that you can use to save on your grocery shopping. Simply allot an hour or so every weekend to search for coupons that you can use to get discounts. Some coupons are generous enough to give you up to 50% off on some products.
  • Remove any extras on your subscriptions. You can also remove any extras in your subscriptions like caller ID or a satellite package. If itis not being used or if you can survive on the basic plan, then just opt for that.
  • Learn to do things on your own. DIY is one of the best saving strategies there is. Cook more so you don’t have to buy take out meals. You can also try to plant herbs in your kitchen counter so you don’t have to buy them in the grocery. Do your own gardening too so you don’t have to hire someone to do it for you.
  • Be energy smart. If you have old appliances, you may want to change them into energy efficient ones. They would cost less when it comes to your monthly utility payments. Things like programmable thermostat can help you reduce your consumption and thus help you reduce your energy bills.

These saving strategies should help you lower your monthly spending at home. That way, you could leave room in your budget for other things like debt payments or savings.

How To Spring Clean Your Personal Finances

dollars hanging out to dryDid you know that spring cleaning is not only applicable to your home but also to your personal finances?

March is here and everyone is getting ready to do some spring cleaning. Once the snow has melted, it is time to check out homes to see how it can be cleaned and maintained for the coming year. While you are at it, why not look into ways that you can clean out and make changes in your financial management efforts?

What you need to realize is that your finances require constant checking. It is actually not something that you do only once a year. You do not set up a budget and then leave it at that. A lot of changes happen in your life that directly affects your personal finances. When you get an increase in salary, when you open a monthly subscription, when you use your credit card – these require you to revisit your financial situation to make sure that your decisions will not cause your financial demise.

According to, there will be a lot of improvements in the economy this coming 2015. One of them is the increase of employment. In 2014 alone, 3 million jobs were created for the unemployed. This is predicted to continue this year. With additional news about gas prices and possible stagnant inflation rate, you want to make sure that your finances is positioned in such a way that will make your net worth grow this year. Ideally, you want to do a monthly checkup to make sure that your finances are in good condition. But if what you will do is something as thorough as spring cleaning, then it can be done once a year.

5 ways you can clean out your financial life

There are three important reasons why you need to clean out your finances.

First, it allows you to organize your financial files. When things are organized make you more efficient as you complete financial tasks like paying your debts and bills. But more than that, it gives you a clearer picture of what your current financial situation is like. It allows you to make better decisions because you are aware of what your finances can afford. Finally, cleaning out your finances will help protect you from the dreaded loss of data or identity theft. These will not only rob you of money, it can also ruin your financial prospects. It can ruin any opportunity that you may have to improve your financial position.

So now that you know why it is important to spring clean your personal finances, the next question is, how are your going to do it? Here are 5 things that you can do.

  1. Revisit your budget plan. Your current budget is a reflection of your financial priorities. In most cases, your financial priorities are aligned with your current goals. As we age, our goals change over time. When we experience changes like marriage or parenthood, we find that what used to be important is no longer valuable and we look into things that we never thought would mean so much to us. Since these changes are constant in our lives, it is also important that we revisit our budget every now and then. That is the only way we can make sure that it is still aligned with what we currently prioritize in our lives.
  2. Simplify your financial tasks. You may also want to revise any payment terms that you may have – especially if it involves debt. If you have a lot of credit obligations, you may want to change your payment term to grab a lower interest rate or to help you save more in the long run. For instance, if you received a salary increase, you may want to put in more money into your debt payments. That way, you can pay the balance off a lot faster. In terms of managing your finances, you may want to look into the latest apps that can help you stay on top of your money.
  3. Try to get better deals. We all have monthly payments to take care of. As you are spring cleaning your personal finances, you may want to take this time to review your payments and to see if there is some way that you can get a better deal. If that means calling your service providers to negotiate a better offer or going to a new one, maybe that is what you should do. As long as it will help you get a better value for your money, the change should be worth it.
  4. Take a peek at your credit report. One of the things that you need to do as a good money manager is to check your credit report every now and then. Each year, you are entitled to get one free copy of your credit report from each of the three major credit bureaus. You might want to pick one of the bureaus and get your free copy to see if everything is in order. You can see if you had been a victim of identity theft or not. You can also check how much money you owe your creditors. If there are any errors on your report (like a debt that is already paid or a credit account you did not open, you need to have this fixed immediately. According to an article published on the, all three major credit bureaus, Equifax, TransUnion and Experian have promised to improve their dispute resolution process. Now is a great time to do just that if you find any errors in your report. You do not want any mistake or wrong entry haunting you.
  5. Physically clean out your wallet and financial files. Lastly, you may want to take a look at your wallet and your financial files. If there are bills that are already paid or receipts that you no longer need, you may want to dispose of them. And you can also review the important documents and receipts that you need to keep for a very long time. Make sure these are kept in a secure location.

These 5 tips should help you make a thorough spring cleaning on your personal finances.

How to take your financial situation to the next level

Now that you have cleaned out your finances and have put everything in order, it is now time for you to consider the steps that will take your financial situation to the next level. After all, you do not want a stagnant financial life. You want it to keep on improving because it will really benefit your future.

Here are a couple of things that you can do.

  • Pay off your debts. If you really want to improve your net worth, you should consider erasing all your debts. You are wasting money through the interest that you are paying your creditors. Instead of investing that money, you are just making them rich. So if you have the extra cash, just pay off what you owe so you can work on growing your money.
  • Boost your emergency fund. According to an article published on, a lot of Americans, although they keep budgets, do not have enough cash to deal with emergency situations. 6 out of 10 do not have the cash outside of their budget to help with any significant emergency expense. This could lead you to debt so make sure your reserve fund is sufficient.
  • Increase your retirement contributions. If you want to directly invest in your financial future, you need to increase the contributions that you are making towards your retirement account. This is especially true if your employer is matching whatever you are contributing. It will increase the free money that you are practically getting and make yourself more secure when you retire.
  • Add to your investments. Speaking of investments, you may want to start investing in something. It does not have to be in stocks or bonds – at least, if that is something that you do not really understand. But you can at least invest in something that grows in value over time – like gold or your own home. It will help increase your personal net worth. In truth, it does not have to be a lot. You can invest on a pauper’s budget if that is all you can afford. As long as you start with something, even if it is small, it will grow soon enough.
  • Set up financial goals. Lastly, you may want to set up some realistic goals that you can reach. If you have goals, you have something to focus on. Here is a video that will help you set financial goals – at least, those that you can commit to and succeed in achieving.

How To Put Your Personal Finances On Autopilot

student with a notebook and calculatorIf you’re like most of us you have a smart phone. If so, you’ve probably already learned how to manage a lot of your life. You may be using apps to wake you up in the morning, to remind you of meetings and other important dates, to keep track of your music and to provide you with the news of the day. But did you know that you could use that phone to automate much of your personal finances? There are a number of great apps that can help you better manage your money whether you’re saving, investing or just want to keep an eye on your cash flow. But of all these apps there are five you could harness to put your financial life basically on autopilot.

Mint Bills

One of our personal favorites for budgeting is The app Mint Bills distills down the best of what this program offers and presents it in clear, easy to understand snapshots of your overall budget. It combines this with the ability to pay your bills. All that’s required is that you sync your bill-paying account with those bills you pay each month such as your credit card bill, cable, cell phone, etc. Mint Bills will then determine when your bills are due and send you an alert. You could open the app and pay the bill right there and then. Mint Bills also allows you to track your investment accounts and your savings. Another feature of this app, which you should definitely take advantage of is its alert system. If any suspicious transactions occur on your account or your account balances run low, it will immediately tip you off. You can download Mint Bills free and any payments you make via your bank account are also free. But one thing you don’t want to do is use this app to pay bills with a credit card. These transactions cost a $4.99 processing fee, which switches to a flat 4% if the payments are over $125. Do the math. That’s $5 per transaction. Ouch.


You’ve probably heard that old adage that giant oak trees from little acorns grow. We’re assuming that this probably has something to do with the name of this app. Whether that’s true or not, this app is a great way to start investing if you don’t have much money. You link it to your debit card. When you use the card to buy something and it doesn’t come out to be a round number, Acorns will round up the transaction to the nearest dollar and then save that change. When your savings balance hits $5, Acorns deposits the money in whatever investment account you chose. You will need to provide the app with some personal information regarding your investment goals, your income and your net worth. It will then recommend one of five investment portfolios. These portfolios range from aggressive to conservative and consist of ETF’s that are chosen and rebalanced by the Acorns people. The app is free to download but costs $1 a month until there’s $5000 in your account. After that, Acorn’s fee is 0.25% of your total assets per month. If you decide to withdraw your funds there are no fees.


Would you like to be able to save money without even knowing you’re doing it? I mean, talk about painless. After you sign up for Digit you will need to link it to your checking account. The app has a very smart algorithm that will monitor your spending. Then every few days it will determine what you can afford to save. It will then move the money into a Digit savings account, which is insured by the FDIC up to a maximum of $250,000. The beauty of this app is that it only takes a small bit of cash at a time so that you hardly notice the money has been withdrawn. It also eliminates the fear of overdrawing your account because of this was to happen, Digit will pay any overdraft fees. Most of the savings transfers that Digit makes range between $5 and $30. However, there is one downside, which is that you don’t earn any interest on your money. This means that you don’t want to use this account for long-term savings. You would be better off leaving that money in high interest-bearing accounts. But Digit represents a terrific way to save up for something mindlessly such as gifts for the holidays or a weekend getaway.

Credit Karma

There are a number of ways to get your credit score. You could get it on the site if you’re willing to either pay for it or sign-up for a free trial of one of FICO’s services. You can also get your credit score free from the three credit reporting bureaus – Experian, Equifax and Transunion. Some of the credit card companies are now giving credit scores free. Even Mint now provides them. But we really like Credit Karma because it gives you that critical credit score not from just one of the three major credit-reporting bureaus but from two of them – Transunion and Equifax. It will also provide you with a complete summary of your credit history and let you see almost immediately what would happen if you were to make a new credit inquiry or get an increase in one of your credit limits and how this will affect your credit score. Credit Karma can also be very useful for monitoring your credit to see if there are any suspicious activities. Just as important, it’s free.

stack of cash

Personal capital

Finally, the app Personal Capital offers all the same would impact your credit score. budget-tracking abilities of programs such as Mint but is great if you are an investor and would like to track all your investments in one place. One of Personal Capital’s most important features is that it will analyze your mutual fund and retirement account fees and then alert you if they’re are higher than average. You can also see snapshots of how your investments are doing in real time with a feature called Investment Checkup. To take advantage of this you will need to sync your accounts with the app or to its website. If you have more than $100,000 in assets Personal Capital offers a financial advisory service that provides low-cost wealth management services. Personal Capital is free to download. The fees for financial advice start at 0.89% for assets under $1 million.

A word of warning

All of these apps with the exception of Credit Karma require that you link them to your financial accounts. As you might guess they each have an impressive list of security and privacy protections to ensure that your information stays secure. However, beyond this you should take whatever steps you can to protect your accounts on your end. This means setting up a PIN on your smart phone or what’s even better is fingerprint ID. Also, sign up for two-factor password protection if it’s offered and alerts that will tell you if your account changes.

The net/net is that if you’re willing to spend a few minutes downloading and setting up these apps you will have basically automated the most important parts of your personal finances – and saved yourself many hours of drudgery.

How To Save Money On Everything You Buy

What’s your number one goal in life? Is it to retire early? Maybe it’s to take three months off and tour Europe. Or maybe you’d like to buy a house and wave goodbye to your landlord. Whether one of these is your primary goal or it’s something entirely different there is one thing for sure. You need to be saving money to achieve it. And, of course, the more money you can save the faster you will see that dream become a reality. And, believe it or not, you can save money on everything you buy. In fact, if you put your mind and your efforts toward it you should be able to cut your spending by at least 20%.woman carrying groceries

Save money on groceries

This is an area where you could achieve some really big savings. First, if you’re not already doing this draw up a menu for the entire week and then make your grocery list based on it. In fact, you should never go grocery shopping without a list. It’s the only way to stay on track and buy just the things you need and not those “little extras” that look so appetizing.

Next go online and start looking for money saving coupons. We’d be shocked if you don’t find coupons that would save you money on every item on your grocery list. We’ve seen examples of where one smart woman was able to buy more than $100 worth of groceries for less than $10 – just by using coupons.

Save money on clothes

This one may not appeal to you but you can save a bundle by buying a lot of your clothes used. If you wouldn’t be caught dead in a thrift store there are now many “up-scale” stores that specialize in slightly used high-end clothing. If you just can’t bring yourself to shop in one of these stores at least make sure you buy what you need when it’s on sale. There are always good bargains to be had when stores are clearing out merchandise at the end of a season. Our largest department store was recently advertising $35 shirts for less than $10 to make room for the new summer fashions.

Save money on entertainment

We have movie theaters near us that specialize in second-run films or those that had just finished a run in the regular theaters. If you have s theater like this near you and can be a bit patient, you could see films that cost $12 just a few weeks ago for $4 or less. If you can be really patient you could wait until those films are available on Netflix, Amazon Prime or On Demand for around $6.

How much are you spending on cable or satellite television? Here’s another area where it’s easy to save money. Go online and see what plans your provider offers, find a less expensive one and then contact your cable or satellite company and ask for the cheaper plan. If you’re feeling really gutsy you might be able to cut the cable entirely. Dish now offers a bundle of 20 popular channels for $19.95 a month called Sling TV and with no contract. You can probably get all of your local channels in HD free with just a small antenna. Combine the two and you’d have all your local channels and 20 of the most popular ones (including ESPN) for less than $20 a month. If you have kids you could add on a bundle of children’s Sling TV channels for just $5 more and there’s yet another $5 package for the sports fan.

Save money on utilities

Cutting the cost of your utilities is also fairly simple. If you don’t already have one, you should invest $50 and buy a programmable thermostat. It will probably pay for itself in just a few months and then continue saving you money for many years to come. You can also cut your electrical bill by switching to CFL bulbs and by making sure you turn off your electronic devices when you’re not using them. And when it comes to water you could make the supreme sacrifice and cut your shower time in half.

You’ve probably seen those commercials where one cell phone provider promises to cut your bill in half. Well, if you’re spending $100 or more a month you might want to give that company a try. If you’d rather not switch carriers at least contact your current provider to see if you couldn’t get on a cheaper plan.

Save money on insuranceStethoscope on pile of money

Have you recently comparison-shopped your auto and (if applicable) your homeowners insurance? There’s good money to be saved in this area. Go online to sites such as Esurance and NetQuote, type in your coverages and you might find you can save a bundle by changing to a different insurer. You should also get out your Declarations and review them very carefully. This is where you will find your coverages and how much each costs. You might find you’re paying for coverages you don’t even really need. For example, if you have a car worth less than $2000 it doesn’t make much sense to pay for collision insurance because in the long run it would be cheaper to just replace it.

Save money on food

By this we don’t mean saving money on groceries, which we covered in an earlier paragraph. What we mean here is to save money on restaurant meals, take out and ordering in. Get out a pencil, a piece of paper, your checkbook and your credit card bills and make a list of all the money you spent on this food. If you find you’ve been spending several hundred dollars a month – which is very possible – make a resolution to cut this in half. Try taking lunches to work with you and fixing more of your meals at home. If you hate the idea of coming home at the end of a hard day and then have to fix dinner, just make one big pot of something on Sunday and then serve it several times throughout the week. Or if you don’t already have a crockpot, get one. Start your dinner in the morning when you’re feeling fresh and it will be there waiting for you hot and yummy when you get home tired.

Save money on transportation

If you have a relatively long commute try to find someone that either works for the same company or one close to where you work and that lives near you. Suggest that the two of you rideshare. This could cut your gas casts by 50%. Plus, it would reduce wear and tear on your car and you might even be able to save money on your auto insurance.  An even better idea is to create a carpool with four or five people as this would cut your costs even more dramtically. Here, courtesy of National Debt Relief is a brief video showing how to create a carpool.

If you can’t find anyone with whom to rideshare or carpool check out public transportation in your area. A half hour bus ride can actually be a relaxing way to start your workday.

First, create an emergency fund

What should you do with all that money you’re now saving? If you don’t already have an emergency fund this is where all those savings should go initially. Most experts say that you should have the equivalent of six months of your living expenses tucked away. If that seems too daunting try to save the equivalent of at least three months worth. Whichever you choose, an emergency fund just makes good sense as it’s a way to protect yourself from those un foreseen financial problems of life such as a serious illness, an automobile accident or if you were to lose your job.

6 Ways To Slash Expenses … Practically Overnight

cutting moneyIf you feel as if you are falling deeper and deeper into a financial hole it doesn’t take a crystal ball to figure out the problem. You’re spending too much money. If you don’t believe us, take out a piece of paper or your eTablet and write down all your spending for the past 30 days. If you have a problem remembering all of them, get out your credit card statements or your checkbook. Next, add everything up and compare it to your earnings. There, see, you’re spending more than you earn. And if you don’t do something about this, your financial problems are only going to get worse. So, what can you do? Here are six ways you could slash your spending.

Consolidate your debts

When you analyze your finances do you find you have multiple debts– especially credit card debts? If this is the case you should consolidate them so that you’ll have just one payment to make a month that should be much lower than the sum of the payments you’re currently making. One way to do this is with a debt consolidation loan. If you can qualify for an unsecured loan, meaning that you don’t have to offer any asset as collateral, you should have a much lower interest rate than those on your credit cards as well as a lower monthly payment. This will simplify your financial life because you’ll need to make only one payment a month instead of the multiple payments you’re now making. If you’re unable to get an unsecured loan you might try for a balance transfer where you transfer the balances on your high interest credit cards to one with a lower interest rate. You might be able to get one of those 0% interest balance transfer cards and pay no interest for anywhere from 12 to 18 months, which could shrink your monthly payment dramatically. There is also consumer credit counseling where a debt counselor would help you develop a debt management plan designed to get your finances back on track. While not all these options are for everyone there are circumstances where at least one of them could help.

House with cash on the roofRefinance your home

If you haven’t checked the interest rate on your mortgage recently, now might be a good time to do so. Mortgage interest rates are at nearly all time lows. Refinancing is where you get a new loan with new terms. This will change the length of your loan as you’ll be resetting it back to zero but this should help you get a better interest rate, which will mean a lower monthly payment. Go online to a refinance calculator and compare what your current mortgage monthly payments are vs. what a new, refinanced monthly payment would be to see how much you could save. You might be surprised at the difference. We know of people that have saved $300 or more a month by refinancing. However, it’s important to remember that in order to get a good interest rate you need to have a good credit score. You can get yours on sites such as, and Credit scores typically range from 300 to 850. If you want to get the best possible interest rate when you refinance, you will probably need to have a score of 750 or above.

Get green

Energy costs can be especially a problem these days as costs continue to increase as do the number of electronic devices we have in our homes. This can make it a good idea to take some environmentally friendly actions to slash you expenses and do something nice for mother Earth. You can get especially good savings by changing to energy efficient solutions such as compact florescent lights, timers, power strips and programmable thermostats. You should also consider air sealing your house – especially if it’s an older one– and do unplug your devices when they are not in use.

Revisit your insurance premiums

There’s no question but that you need insurance to protect yourself against the unexpected but there’s no reason to overpay for it. This can leave you vulnerable in another way and that’s to financial problems. If you haven’t shopped around for your homeowner’s, health, auto and life insurance recently you need to do so. Websites such as Esurance, NerdWallet, Selectquote and Intelliquote make it easy to compare insurance premiums from many different insurers. It’s just good to check your insurance options from time to time to make sure you’re getting the coverage you need at the best possible price.

Quit eating out

Ordering in or eating out can seem like a real timesaver. However, the cost of this is far from minimal. You could cut your food bill by cooking your meals at home and by packing lunches to work. If you would like to cut your spending even more, make meals in bulk and then freeze them for future use. You will also spend significantly less money if you buy store-brand or generic products in place of name brand items. And, of course, you could save even more if you start a garden and grow your own fruits and vegetables.

Smiling young male with tie posing next to his carBuy used

Thrift shopping can help you slash expenses by thousands of dollars a year. Vintage clothing, cell phones, furniture, computers, kitchen appliances – just about everything you can name can be purchased second hand on sites such as Craigslist, eBay and Etsy. There are probably second-hand stores near where you live as well as thrift stores run by nonprofit organizations like ARC (Association for Retarded Citizens) and Goodwill. Before you turn up your nose at the idea of shopping in a thrift store, go check one out. You might be surprised at the items you find and their prices. Sometimes people just need to get rid of stuff that’s in good shape because they’re downsizing, no longer have room for it and choose to donate it. We know of one young man that essentially furnished his living room out of a Goodwill Store and the furniture was in such good shape you’d never know where it came from.

Another area where you should definitely buy used is an automobile. You may have heard that a new car loses a chunk of its value the minute you drive it off the dealer’s lot and it’s true. In fact, the website Trusted Choice estimates that it drops 11% in value. This means if you buy a new car for $31,252 it’s worth only $27,814 the minute you get home. One year later, thanks to depreciation, it will be worth $23,523 and two years later that $31,22 car will be worth just $16,867. Now, for the good news. If you were to buy that car when it’s two years old and pay just $16,867, you’ll have saved $14,385 and will be driving a really great car that once sold for more than $31,000! To put this another way, that other guy’s loss is now your gain.

Buying used cars makes even more sense today thanks to leasing. You’ve undoubtedly seen those ads where new cars can be leased for $225 a month or even less. Where do you suppose those cars go when their leases are up? They go to auto auctions where used car dealers buy and resell them. If you shop carefully, you should be able to pick up one of these cars at a real bargain and drive home with one that’s only a couple of years old and is fully loaded.

Purchasing A Big-Ticket Item – Pay Cash or Use Credit?

Man looking frustratedIt doesn’t happen every month but at least once or twice a year you’re faced with the task of purchasing a big-ticket item. It might be a new washer-dryer, new living room furniture or an entertainment center. You’ve decided what you want to buy and how much you’re willing to pay for it but … the question is should you pay cash or use credit? Unfortunately, what financial experts will tell you is that there is no hard and fast answer. The decision to pay cash or to use credit will depend on your finances, whether or not the asset will increase in value and what interest rates are available.

The first thing you should do according to most financial experts is evaluate your personal finances. What’s your household income? Do you have one or two wage earners? Is your income very consistent? How much are you saving for retirement? Do you have a lot of revolving, credit card debt? If your answers to these questions tended to be on the negative side, it would make less sense to buy that big-ticket item in the first place. If you find that you would have trouble financing the purchase, this could create even greater problems going forward.

When financing doesn’t make sense

If you’re eyeing something that’s actually out of your reach financially or beyond your means then financing it just doesn’t make sense. The only time it makes sense to finance a big purchase is if it’s an asset that will grow in value such as your home or an educational degree. The reasoning here is that the asset will ultimately be worth more than what it would cost you plus the interest you paid. And despite what you may have been told, it just doesn’t make sense for most people to pay $500,000 in cash for a home when they could invest that money and get a 6% or 7% rate of return.

Not all are created equal

It’s important to understand that not all loans are created equal. If you were to take out an interest-only loan this can mean that you’re buying a house you truly can’t afford. When you do this, you really don’t own your home. The bank does. While your mortgage loan payment may be low it’s important to remember that you’re spending money every month but not making any progress towards owning your home. In other words you never gain any equity. The better option is to get a loan where every month you’re paying on both the interest and principal.

The conventional wisdom

While conventional wisdom is that you shouldn’t finance any asset that will depreciate such as a car, a vacation or consumables this is not necessarily true these days. Interest rates are at almost all-time lows. It might make good sense to finance that car. If you can find a dealer that will give you 2%, why not take it? This means that if you have a four- or five-year loan, you’re basically financing your purchase at the rate of inflation. For that matter, 0% financing can be had on a number of purchases such as furniture and jewelry or even an automobile. Unfortunately, those mouthwatering rates are typically available only if you have a credit score of 720 or higher.

Paying it off immediately

If you decide it’s not best to finance that big-ticket purchase you might consider using a credit card to buy it and then pay off your balance immediately in place of handing over cash or writing a check. The policies on credit cards vary but there are often advantages to charging a big purchase. In fact, any time you can put a large purchase on a credit card, it’s pretty appealing to do so. When this is the case, you’re simply using the credit card as a sort of payment conduit so that you can pick up points or miles. In addition, some cards offer protection for the purchases you make with them. As an example of this, if you have a credit card with built-in travel insurance you’d probably be better off charging that $5,000 vacation as cash doesn’t come with any of these kinds of protections.

The caveats

If you decide to use your credit card to make a big-ticket purchase there are some caveats to keep in mind. For one thing, don’t max out your card in such a way that it disrupts your everyday cash flow. You could have an utility bill you pay automatically that bounces because putting that big-ticket item on your card put you at your credit limit. In addition, you should try to keep your debt-to-credit ratio at 30% or less to maintain a good credit score. If you’re not familiar with your debt-to-credit ratio it’s simply the amount of debt you’ve used divided by the total amount of credit you have available. For example, if you have $7500 in total credit limits and you’ve charged up $2000, your debt-to-credit ratio would be roughly 26%, which is good. Your debt-to-credit ratio makes up 30% of your credit score so if you were to let it get to 40% or more your credit score could be adversely affected. You need to be careful when charging that big-ticket item as it could put you over the 30%. And of course, you don’t want to put a big purchase on a credit card if you’re already carrying a revolving balance. This can be a slippery slope that ends in serious financial problems. In fact, this is where most people get into trouble – by continuing to use their credit cards when they can barely make the minimum monthly payments required.

If you’d like to learn more about credit scoring and why your credit score is important then here’s a short video from the credit reporting bureau TransUnion you should find of interest.

When it makes more sense to pay cash

There are certain instances where it’s better to pay cash or to write a check then to put the purchase on a credit card. As an example of this, it’s best to pay cash if it would allow you to negotiate a price as with an independent shop or a dealer. You might be able to save 10% or even better on a purchase if you can pay with cash. There are also some institutions or businesses that charge credit card-processing fees. If this is the case, make sure that the miles, points or cash back that you’re earning is more than what these fees will cost you.

In short, the answer to the question of whether to pay cash or to use credit when purchasing a big-ticket item is … it all depends. You need to take stock of your financial situation including how much you currently owe on your credit cards, whether you’re purchasing an asset that will grow in value and what the purchase could do to your credit score. If you do this you’re certain to make a good decision and not one that will come back to haunt you in the months ahead.

8 Tips To Keep From Having Your Income Tax Return Audited

young woman looking frustratedWell, it’s that time of the year again. If you’ve already filed your income tax, congratulations. If you’re typical you should be getting more than $3000 refunded. You might think that’s great but remember it’s your money and you let the government use it interest-free. Many people choose to claim fewer or even no dependents so that they can take home more money every paycheck. Others and maybe you’re one view withholding as a sort of savings account that can be cashed in the following year.

Our government has made it clear that fewer people will be audited this your because of funding cuts to the IRS. Of course, that doesn’t mean that you won’t be audited. A tax audit can have a severe effect on your life. You could end up learning that you owed thousands of dollars more than you had thought. However, there are things you can do to reduce the risk that you might be audited.

#1. Prove that you run a small business

If you have a small business, the IRS will forgive you if you show a loss for the first few years. However, if you report that your business has lost money for three years or more the IRS will begin to suspect that it’s more of a hobby than a business aimed at turning a profit. This can trigger a field audit, which is done in person and is a lot more nerve racking than an audit by correspondence. You need to keep records of all of your business expenses and be prepared to document how much time you spend on the business and what you did with it.

#2. Make sure you report all and we mean all of your income

The income you earn from your job is reported to the on an IRS W-2 form. If you have income from dividends, interest or capital gains this is reported to the IRS on form 1099s, as is any income that you earned as a freelancer or independent contractor. You are sent these forms and so is the IRS. So make sure that you include all of the information from them on your tax return. The reason for this is because the IRS uses a program that matches these forms to your return and flags any differences between what you reported and what was reported to the IRS. If the program finds any discrepancies, this will trigger what’s called a correspondence audit. What this amounts to is a letter from the IRS on how much more money you owe because of what you didn’t report. You can either just pay whatever amount the IRS has said you owe or challenge it if you believe that the IRS has made a mistake.

#3. Explain anything that seems “weird”

The IRS is a shark when it comes to unreported income. If you have any income that seems weird, you need to explain it as this may stop the agency from auditing you. As an example of this, if you the net income you report is too little to live on given the size of your family size and where you live, you need to include a statement revealing how you supported your family including any credit cards, loans or savings you used to pay for your cost of living.

#4. Watch those deductions for you home-office

It’s typical to have your office in one place, which would be either in your home or a rental space. Be careful to not report a deduction for both. Of course, you might legitimately have an office at home and in a rental space. If so you will need to explain this in a disclosure statement. You might also have an expense for equipment or a business storage unit. If so label this as a “storage rental cost” or an “equipment rental cost.”

#5. Be honest if you have any money overseas

If you have investment accounts or a bank account overseas you must report any income you earned from it to the IRS. While you’ve always been required to do this, there is the new Foreign Account Tax Compliance Act so that the foreign institution where you have money may start to report the information to the IRS just as would any brokerage or bank in the US. Here’s the scary thing. If you’ve had that account for years but never reported it and the IRS discovers it from your foreign investment firm or bank, you could owe some really serious penalties in addition to back taxes.

#6. Report the sale of mutual funds correctly

Let’s suppose you sold a mutual fund that you bought prior to 2011 and it was not part of your tax-advantaged retirement account and then reinvested in another mutual fund. This must be reported on your income tax return. If you fail to do this the IRS will treat everything you made from the sale of the mutual fund as a taxable gain and will recompute how much you owe. When this is the case, you need to be able to prove that only part of the proceeds you received were actually capital gains and the remaining portion was he amount you had originally invested in the fund. Of course, if you lost money on the fund, you owe nothing on the sale.

#7. Report the sale of your houseHouse with cash on the roof

The title company sends the IRS a 1099-S form when you sell your house showing how much you sold it for. This is true even if all the capital gains you made on the sale are tax exempt because they weren’t more than $500,000 if you’re married or $250,000 if you’re single. It is recommended that you still report the information on your income tax return anyway. Why is this? It’s because that 1099-S will be part of the IRS’s automated form-matching program. If you don’t report it, this can lead to a correspondence audit.

#8. Be wise about your mortgage interest

When you and your spouse own a home, your mortgage holder will send both you and the IRS a form 1098 showing the amount of interest you paid the past year. This is an area where you need to be careful because there are cases where the 1098 has only the Social Security number and name of one of you. If that person were to die and the surviving partner tries to take the deduction, a correspondence audit may be triggered. When this is case you need to have the mortgage holder change the name and Social Security number on the 1098 to yours before it’s filed.

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