MoneyGen Archives | Page 74 of 95

Sep

2023

How to Sell a Car You Still Have a Loan On

By Kelly Boyer Sagert | Budgeting & Goals, Financial Independence, money | Comments Off

If you want to sell your car but still owe money towards the purchase price, the process will be different from selling a vehicle that you own free and clear. And the process will change depending on whether you are selling the car privately, to a dealer, or are doing a trade-in.

Here, you’ll learn the step-by-steps for selling a car that you still have a loan on, as well as learn smart advice for buying your next set of wheels.

How to Sell a Car You Still Owe Money On

At a high level, selling a vehicle with a loan has three main steps:

1. Gather important info

2. Determine if you have positive or negative equity

3. Pick a selling option.

You’ll explore each of these steps in more depth next.

Gather Important Info

First, get a sense of what the car is worth. This will depend upon its condition, so objectively look at your vehicle. How clean is it? How well has it been maintained? What does the body and interior look like? Examine other used cars like yours for sale and see how they’re priced.

Look at used car valuation guides, as well. They will have different values for trade-ins (when working with a dealership) than for private-party sales (when selling to an individual), and will also list retail values. Look at the one that will fit the situation.

Also, verify the payoff amount on the vehicle’s loan. This will include the principal balance plus any accrued interest and is often available online or can be obtained by calling the lender. During the conversation about selling a vehicle with a loan, you can also find out how to send the payoff amount to the lender and when the lender wants to receive it (before or after the sale of the car).

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Determine If You Have Positive or Negative Equity

The vehicle’s equity is the difference between the resale value and the amount owed on it, and this number can be positive or negative.

Let’s say that a vehicle is valued at $20,000 with a loan amount of $10,000; that car has a positive equity amount of $10,000. If, though, the vehicle is valued at $20,000 and the outstanding loan amount is $25,000, then it has negative equity of $5,000. Loans on cars with negative equity are referred to as “upside-down” or “underwater.”

So, when figuring out how to sell a car with a loan, the processes will differ based on whether the vehicle has positive or negative equity as well as the selling option you select.

Pick a Selling Option

If you have a car with an outstanding loan balance — and it isn’t practical or even possible to pay it off — then selling a car with a loan can typically be handled in one of three ways:

• Selling it to a used car dealership

• Selling it privately to another person

• Trading it in.

Selling a Car to a Used Car Dealership

If a car dealership will buy used cars without requiring that you buy one from them during the transaction, then the process will probably be pretty straightforward. The dealer will offer you a certain dollar amount. If you agree, they will pay off the lender in exchange for getting the vehicle’s title.

If there is positive equity on the vehicle, then you’ll get the money that remains after the loan balance is paid off. If it’s a negative equity situation, then you’d need to pay the difference between what the used car dealer is willing to pay and what it takes to pay off the loan.

For example, if a dealer offers $15,000 on a vehicle that has a $10,000 loan, then the dealer would take care of the loan payoff and provide the person selling the car the remaining money ($5,000), minus any fees involved.

In a negative equity situation, for example, if the vehicle’s value is $10,000 and the outstanding loan is $13,000, then the seller would need to chip in the difference (in this case, $3,000 plus any fees) to complete the sale and transfer the title to the buyer.

Recommended: Smarter Ways to Get a Car Loan

Selling a Car Privately

With a private sale, you might get more money than you would from a used car dealer (who needs to resell the vehicle at a profit), but you’d also need to take on more responsibility for managing the sale. This includes the transfer of title and payment of fees among other duties.

Steps to take include the following:

• Get the current loan payoff from the lender (there will likely be interest owed beyond the principal amount).

• Find out what paperwork they’ll need and how they want the process to work.

• Have the buyer follow the lender’s procedures when paying for the car.

From the lender’s perspective, they want to ensure that they get paid. So, as just one possibility, they may have a buyer pay them the agreed-upon price for the vehicle. If it’s more than what’s owed, then the lender could give you the overage. If it’s less than what’s owed, you could give the bank the difference between the price and loan amount.

When selling a car with a loan privately, you’ll also need to handle any fees and forms with the motor vehicle department of your state. Then you’ll be ready to move ahead, and, if another vehicle is in your plans, decide whether to buy or lease a car.

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Trading In a Car You Still Owe Money On

As a third possibility, you could trade in the car with a loan balance to a dealer as part of purchasing either a new or used car. The dealer will offer a certain amount of credit for the trade-in vehicle and if its value is more than the loan amount, that difference would go towards the purchase of the replacement vehicle.

If you’ve been saving for a car, here’s how this might work: The dealer will offer a certain amount of credit for the trade-in vehicle. If its value is more than the loan amount, that difference would go towards the purchase of the replacement vehicle.

If the loan amount is higher than the value, then the dealer may agree to combine the vehicle’s negative equity with the loan for the replacement vehicle. If this is the chosen route, the term may need to be extended to create affordable payments and this will potentially lead to more interest being paid on the new loan.

The Takeaway

Selling a car with a loan is a little different from selling one that’s paid in full. When thinking about how to sell a financed car, it’s easier to do so if you have positive equity in your car but still can be doable with negative equity. Some options include selling to a dealer or to an individual or trading in the vehicle towards another one.

Then you can, if necessary, start a savings account so you’ll be ready to buy your next car.

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Photo credit: iStock/Sakkawokkie

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SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Sep

2023

When Should You Pay in Cash?

By Sheryl Nance-Nash | Budgeting & Goals, Financial Independence, money | Comments Off

Many people don’t carry cash these days, preferring to make a purchase by tapping or swiping a debit card or credit card. However, there are times it can actually pay to dip into your wallet and break out the bills.

Using cash can be more secure and less costly, among other benefits.

Here, you’ll learn when it can be better to buy with cash and when plastic is preferable.

The Benefits of Cash

Here are some of the pros of using cash:

You May Get a Discount

You may be rewarded for paying cash, like paying a lower price at the gas station or when you get take-out at a restaurant.

Many businesses pay a fee for accepting credit and debit cards, so they may be willing to charge you less if you’ll pay in cash. If you frequently fill up your tank, saving even 10 to 20 cents per gallon can add up to significant savings over time.

It Can Help You Avoid Overspending

When you tap or swipe your credit or debit card, you don’t physically see your money leaving your account. Since there’s no sense of immediacy or consequence, it can be easy to spend more than you originally intended. That can lead to debt and overdraft or NSF charges.

If, on the other hand, you leave home with only the amount of money you need for the day in cash, your spending is likely to be more mindful. That could mean you may have a better chance of sticking to your budget and avoiding overspending.

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There Are Fewer Security Risks

Yes, someone could rob you when you are carrying cash. However, there is less risk of identity theft or your information getting stolen when you pay with cash vs. a debit or credit card.

You Can Avoid Fees

Cash is a one-shot deal — the purchase you made won’t end up costing you a penny more. With credit and debit, however, you can end up paying additional charges down the line, from late fees to interest payments on debt.

Recommended: How to Avoid Overdraft Fees

Times When You Should Pay in Cash

Your Tab is $10 or Less

It can be a good idea to carry cash for small purchases. Many retailers have a minimum amount of money you must spend in order to use debit or credit. If your purchase is under, you’ll have to throw in extra things (you probably don’t need) to meet the minimum.

When Shopping at a Small or Local Business

Small businesses often offer discounts for cash payments, since it helps them save on bank fees. This can be an easy way to support your local businesses and save a few dollars at the same time.

You Want to Keep Advertisers at Bay

You may have noticed that after you buy something with a credit or debit card, you often get hit with ads and offers for similar products. That’s because retailers can track their customers’ spending and share their information with a third party, who can then target them with ads.

This can be annoying, and also lead to more spending if you’re enticed by an offer. Using cash makes it much harder for businesses to collect and share your information.

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Times When You Shouldn’t Pay With Cash

Next, learn about the times when you should keep your wallet shut and find another, non-cash way to pay.

Buying a House

If real estate is hot where you live, you may be tempted (if you can) to plunk down cash to ensure you get that dream house before someone else does.

While buying a home with cash vs. getting a mortgage may get you the house, it may not be the most prudent move in the long run, especially if it wipes out all of your savings.

A mortgage has tax benefits and timely payments can help you build good credit. Also, there could be better uses for all that cash, like investing in the stock market or elsewhere.

Business Expenses

If you own your own business, have a side gig, or do freelance work, it can be better to use credit (or even a check) to pay for business-related purchases. You’ll likely want a paper trail so you can deduct these expenses on your tax return.

Another potential perk of using credit is that it may offer some purchase protection in event something you buy for your business that breaks or gets stolen soon after you purchase it.

Paying Service Providers

You may think a service provider, whether it’s an electrician or an auto mechanic did a good job, but only time will tell. Using credit can offer you some protection in the event that you experience problems with a service after you’ve already paid for it.

Renting a Car

Often your credit card will provide insurance on car rentals (which can help you save on renting a car), but only if you use that form of payment, as opposed to debit or cash. Using credit for the car rental can help you avoid paying for something you don’t need to purchase.

You’re Looking to Build Credit

If you need to build your credit score, one way to accomplish that is to use your credit card on a regular basis and show that you’re responsible by paying what you owe each month, consistently and on time.

When Buying Electronics

Using your credit card instead of cash for electronics can be a big advantage if your credit card offers extended warranties as a cardmember benefit. This allows you to get peace of mind without having to pony up for the store’s warranty. And, you can simply pay off the balance as soon as the bill comes.

You’re Looking to Track Your Spending

If you’re looking to see where your money is going so you can track your spending and set up a monthly budget, it can be easier if you pay with credit or debit.

Your financial institution may even offer you a pie chart of your spending, broken down into categories. Seeing everything in black and white can help you become better at budgeting.

Alternatives to Using Cash

Paying in cash has its pros and cons. If you decide that you want to pay with something other than cash, here are some alternatives.

Cash vs Credit Cards

A credit card can be a good alternative to cash if you are able to pay it off in full every month, and you do. If managed well, credit cards (even secured credit cards) can help you build credit to buy a home or another large purchase in the future.

Cash vs Debit Cards

A debit card can be a good substitute for cash, as long as you know there’s money in the bank. By using a debit card, you’re not incurring any new high-interest debt. As long as you are not incurring any overdraft fees, or withdrawing money from ATMs that charge high fees, debit cards can be a simple way to make purchases.

Cash vs Financing or Loans

It can sometimes be better to pay for a major purchase, like a car or a home, with a loan rather than cash if the interest rate is lower than what you could likely earn by investing that money.

However, you’ll also want to keep in mind that there is risk involved in investing in the stock market, so there is always a chance that you could lose money.

The Takeaway

Even as we move towards a more cashless society, it can be important to keep cash in your wallet and use it for certain everyday expenses.

Paying in cash can help you garner discounts at local businesses, stick to your budget, avoid paying overdraft and interest fees, protect against identity theft, and keep advertisers from targeting you.

There are times, however, when it can make more sense to pay with credit rather than cash. These can include: when you’re making business purchases and buying electronics and/or you’re looking to build credit or closely track your spending.

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Photo credit: iStock/towfiqu ahamed

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Sep

2023

woman budgeting looking in wallet mobile

Are You Bad with Money? Here’s How to Get Better

By Jamie Cattanach | Debt Payoff, Financial Independence, Life & Career, money | No Comments

There are moments when you may feel as if you are bad with money: You overdraft your account, pay a bill late, can’t put any cash towards retirement, or realize your savings account balance hasn’t budged in months.

If you feel as if you aren’t managing your money as well as you could in these instances, you might be right. But by taking a closer look at these signals and then shifting your course, you can get on a better track to taking control of your cash, building wealth, and reaching your financial goals.

So instead of just thinking, “I’m bad with money” and sidestepping the issue, read on to learn the signs that you could boost your money management. Then try the simple strategies that can help you improve.

Table of Contents

You Tend to Live Paycheck to Paycheck
You Don’t Have an Emergency Savings Fund
You Only Make the Minimum Payment on Your Credit Cards
You Often Overdraft Your Account
11 Tips on How to Be Better With Money

4 Signs You’re Bad With Money

Sometimes the signs are clear, like getting multiple notifications for overdraft fees in a week. Sometimes, however, being bad with money is less obvious. Here are some red flags that can indicate you’re heading down the wrong financial path.

You Tend to Live Paycheck to Paycheck

Even if you are able to pay your bills in full each month, if you’re often broke after paying them, it can be a sign that you’re not all that financially stable.

Whatever your income or budget is, it can be wise to always have at least a little bit of extra money to put into savings. If that extra doesn’t exist, then you could be walking a financial tightrope, where a major crisis could be waiting just around the corner.

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You Don’t Have an Emergency Savings Fund

Not starting an emergency fund (rainy-day money tucked away in a separate savings account) is an indication that you’re living too close to the edge. It’s important to have that cash to cover an unexpected expense, such as a medical bill, car repair, or sudden loss of income.

Although the specific dollar amount you should have in your emergency fund varies from person to person, many financial experts say you should try to have at least three months’ worth of living expenses set aside to cover the unexpected.

Without this cushion, a single large expense or loss of paycheck even for a couple of months could put you in a debt spiral that can be hard to get out from under. You might be tempted to put too much on your credit card and wind up with high-interest debt.

You Only Make the Minimum Payment on Your Credit Cards

Speaking on high-interest debt: Here’s another sign that you may be bad with money. Paying the minimum on your credit cards may seem like you’re keeping up, but in reality you are gradually getting further and further behind.

If you don’t pay the card in full each month, every dollar you put on a card can end up costing you many times more in interest charges over time. Credit card debt that you can’t get rid of can be a clear sign that you’re not being as good with your money as could be.

You Often Overdraft Your Account

If you’re gotten into the habit of spending almost everything you earn, it can be easy to overdraft your account. This often results in a high overdraft or NSF fee, which can make keeping up with your expenses even harder.

Overdrafts can also result from disorganization. Maybe you have the money, but didn’t transfer it over to your checking account in time. This can be a sign that you’re not keeping close enough tabs of your money.

Recommended: How to Avoid Overdraft Fees

How to Be Better With Money: 11 Tips

Becoming better at money management doesn’t have to happen overnight. In fact, the best approach to lasting change is often to take one small step at a time. This can be much easier to do and, as you start to see the rewards (more money, less stress), you will likely be inspired to keep going.

The following tips can help put you on the path to being good with money.

1. Setting Some Specific Money Goals

You likely have a few things you’d like to do in life that having enough money can help you accomplish. Maybe you want to take a great vacation next year, buy a home in a few years, or retire early.

Setting financial goals, both for the short- and long-term, can give you something to work towards — or, in other words, a reason to be better with your money.

Recommended: What is Financial Therapy?

2. Tracking Your Cash Flow

In order to get better with money, it can help to know exactly where you currently stand.

You can do this by gathering all your financial statements for the past several months, and then adding up all of your after-tax income to see how much is coming in each month.

Next, you can tally up how much you are spending each month. To do this, you may want to make a list of all your spending categories and then come up with an average amount you’ve been spending on each.

You may find it helpful to actually track your spending for a month or two, either by journaling or using an app that tracks spending right on your phone.

Ideally, you’ll want to have more coming in than going out each month. That means you have money you can siphon off into saving and investing, which can help you build wealth over time.

3. Coming Up With a Budget Method That Works for You

Once you have a clear picture of what’s coming and going out each month, you can create a budget for your money moving forward — in other words a budget.

While budgeting may sound onerous, it’s simply a matter of going through your expenses, seeing where you may be able to cut back, and then coming up with target spending amounts for each category.

One budgeting framework that may help you get started is a 50/30/20 budget breakdown. The idea is that 50% of your after-tax income should go to necessities, 30% goes to fun spending or “wants,” and 20% goes to savings goals.

These percentages may not work for everyone, especially if you live in an area with a high cost of living, but they can give you a general rule of thumb as you get started with budgeting.

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4. Curbing Impulse Purchases

If you tend to shop without a plan, it can be easy to grab this and that without realizing how quickly these small costs can add up. A perfect example is going grocery shopping. But the same thing can happen if you are mindlessly browsing shops at the mall or online.

Making a list — and sticking to it — whenever you shop can help you avoid overspending. If you see something you really want but you weren’t planning to buy, it can be a good idea to put the purchase on pause for a day or two.

Once you have a cool head and a fresh perspective, you can then ask yourself if you’ll actually use this item and if you can afford it, meaning you can pay cash for it now. If not, it may be a good idea to skip it.

5. Thinking About Larger Spending Cuts

There are only so many lattes you can skip or cents per gallon you can save by heading to the cheaper gas station around the corner. So when you’re trying to find places to save money in your budget, you may also want to think bigger.

For example, you might decide to ditch your car in favor of biking to work — a move that means you save not only what you’d be spending on gas each month, but also insurance, registration, and likely a monthly car payment. (And you might even be able to ditch your gym membership, with all that moving around!) Or, you might consider moving to a less-trendy neighborhood or getting a roommate to help split the rent and other household expenses.

While lifestyle changes might be harder to enact up front, once you commit to them, they can help you save large amounts of money on a regular basis.

6. Automating Your Savings

Building an emergency fund and saving for future financial goals are key steps toward fiscal wellness. So once you have graduated from being at risk of overdrafting your accounts, a great next step can be to automate your savings.

That means setting up an automatic transfer of money from your checking account (or wherever your money is deposited) to one or more accounts designated for saving. This can be done on a monthly (or bimonthly) basis, and can be timed to happen right after your paycheck hits.

If saving is a chore that you have to remember to do every month, you may get busy and forget. Why not let technology do the heavy lifting for you?

7. Bringing in More Income

Do you feel like you’re cutting back on spending as much as possible but not getting anywhere? You may need to work on earning more money.

How exactly you go about this goal is up to you, of course. Maybe this means sitting down with a boss and creating a path towards earning more money. Or, it could mean picking up some freelance work in your profession, or starting a side hustle (like pet-sitting or signing up with a ride-share or delivery app).

8. Listing All of Your Debts

Many bad financial habits are born from the easy access consumers have to money that isn’t theirs — and the need to pay those debts back, with interest.

As with budgeting, the first step in conquering your debts is knowing exactly what you’re up against. To get the big picture, you may want to create a computer spreadsheet (or just make a chart with pen and paper) and then list each source of debt that you currently hold.

This includes student loans, credit cards, car loans, and any other debts you may have. You may also want to include the loan servicer, the size of the debt, the interest rate, and the amount and date of the monthly payment on each debt.

9. Knocking Down Debt One at a Time

If you’re paying the minimum on more than one high interest credit card, you may want to focus on getting rid of one entirely. It could be the debt with the highest interest rate, or it might be the smallest overall balance to give you the psychological victory of kicking a source of debt to the curb.

Whichever one you choose, you can then put as much extra money as you can towards the balance (principal) of that debt, while paying the minimum amount due on all the others. Once you pay that debt off, you can move on to the next one.

10. Avoiding More Credit Card Debt

Getting better at managing your money can be hard to do when you’re adding to your credit card balance. Credit cards are notoriously difficult to pay back when you’re only making the minimum payments and can be nearly impossible if you’re doing that while adding to the balance.

So, you may want to use your newfound money management skills to find ways around going further into credit card debt. Maybe there are more cuts that can be made to your budget or some overall shifts in lifestyle that could help. No matter how you do it, it can be helpful to focus on spending only the money you actually have.

11. Contributing More to Your 401(k)

You might think saving for retirement is something you don’t really need to focus on until you’re older. But the truth is that the earlier you start saving for retirement, the easier it will generally be to save enough to retire well. That’s thanks to the magic of compounding interest, which is when the interest you earn on your money earns its own interest.

If your company offers a 401(k), it can be a good idea to contribute at least a small percentage of each paycheck. If your employer offers matching funds, you may want to take full advantage of this perk by contributing the max amount your company will match.

Recommended: When to Start Saving for Retirement

The Takeaway

You don’t have to master all of the above concepts right away. Becoming a person who is “good with money” is a journey. Start with one area and move on to the next as you feel you have mastered each financial tool.

One simple step that can make it easier to manage your money is to find the right banking partner, one who can help you with tools for tracking and managing your cash.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.

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Aug

2023

7 Easy Ways to Improve Your Gas Mileage

By Kelly Boyer Sagert | Budgeting & Goals, Financial Independence, money | Comments Off

At the end of summer 2023, a gallon of regular gas cost just a hair under $4: perhaps not the worst you’ve ever seen, but not exactly a bargain basement price either.

According to J.D. Power, Americans spend about $5,000 on gas a year, a not insignificant figure.

If you’re looking for ways to save on this expense, this guide can help. It shares seven easy ways to boost your gas mileage, meaning you’ll go farther on a tank’s worth. Read on to learn how to save.

How to Improve Gas Mileage

Gas mileage is measured in miles per gallon (mpg). If a vehicle gets 25 mpg, this means that, on average, it can be driven for 25 miles for every gallon of gas pumped into it. Overall, miles per gallon is typically higher for a vehicle during highway driving than on city streets where speeds are slower and vehicles idle at stop signs and traffic lights. Vehicles can, in fact, typically get five more mpg with highway driving than with city driving.

Fortunately, there are ways to improve gas mileage no matter where you’re driving, many of them reasonably simple. To help, here are seven money-saving ideas for better gas mileage and two busted myths.

1. Reduce the Weight

Get rid of excess weight in the vehicle by removing unnecessary items in the trunk and backseat to lower fuel consumption. Every 100 pounds added to a car boosts fuel consumption by 2%. Think carefully about what to remove. Maybe those golf clubs don’t have to perpetually stay in your trunk. Taking out a toolbox full of tools, however, might reduce the weight being carried, but those items might be sorely missed in an emergency.

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2. Watch Your Speed

In general, the mileage a driver gets from a gallon of gas decreases pretty quickly when traveling more than 50 miles per hour, according to the U.S. Department of Energy (DOE). Lowering your speed by five to 10 mph can raise fuel efficiency by 7% to 14%. Why? Higher speeds decrease fuel economy because of two factors: air resistance and tire rolling resistance.

3. Keep Tires at Optimal Pressure

The DOE reports that keeping your tire pressure in the sweet spot can enhance your gas mileage. If your tires are underinflated, you can lower gas mileage about 0.2% for every drop of 1 psi (pressure per square inch) in the pressure of the tires. Overall, proper inflation can boost your mileage by up to 3%, which can add up at the pump.

4. Monitor Your Driving

Using a trip computer, drivers can receive immediate feedback about the impact that an action, such as the rapid acceleration of a vehicle, has on gas usage. These real-time, personalized insights into how to improve fuel economy, fuel consumption, maintenance reminders, and more.

5. Plan Your Gas Stops

Using a combination of strategies for how to improve gas mileage can help to reduce fuel costs. Having to fill up at a pricey pump, though, can negate all of that hard work. So, when out on the road, especially when away from home in unfamiliar territory, consider using apps like Gas Guru or GasBuddy. They can help you to find the most affordable gasoline in town, wherever you are when it’s time to fill up.

Recommended: 25 Ways to Cut Costs on a Road Trip

6. Road Trip Wisely

If you’re planning a trip and have a choice of cars to drive, some factors to consider are the car’s size (you want enough room to be comfortable as you travel as well as any luggage you bring) and its gas mileage. Using a trip calculator can estimate fuel consumption for each car so you can pick the one that will cost the least in gasoline.

7. Cold Weather Strategies

When thinking about how to get better gas mileage, take a look at the thermometer, and plan your winter driving carefully. FuelEconomy.gov states that the miles per gallon can be 15% lower, more or less, at 20°F than at 77°F. Since most of us can’t hibernate all winter long, money-saving suggestions include warming up your car for 30 seconds only and then driving gently to allow the vehicle to warm up in a more cost-efficient way. Also, combine trips whenever possible — especially in the winter.

Myths About Gas Mileage

Some strategies to improve gas mileage are tried and true, but there are still some myths that continue to be perpetuated. Here are a couple of common myths that don’t prove to be true when it comes to saving money daily on gas.

1. Refueling When Cool

Some people buy gasoline in the morning when temperatures are cooler, believing that this will help them get better gas mileage. The theory behind this idea is that cooler gas is denser, so you’ll get more bang for your buck in the mornings. However, consumer watchdogs say this won’t make any practical difference though, especially since most gas stations store the gasoline underground where temperatures are pretty stable.

2. Changing the Air Filter

In the past, people believed that dirty air filters reduced fuel economy because of lowered air intake. While studies have shown that a vehicle’s acceleration was lessened when an air filter change was overdue, swapping it out probably won’t boost fuel economy in most cars. Wondering what changed? Engine computers have the ability to compensate for the reduced airflow to maintain the right ratio between air and fuel.

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Budgeting for Gasoline and More

How much can you afford to pay for gasoline each month? If you aren’t really clear about that, making a monthly budget can help. Basic steps of creating a budget include:

• Gathering all of your financial documents together

• Figuring out your monthly take-home pay

• Adding up monthly fixed and variable expenses

• Using this information to create a workable budget

While creating your budget, consider how much gas is used for needs (such as getting to work) and how much for wants (driving around town while trying to decide what restaurant to pick). One popular personal budgeting method involves dividing expenses into needs and wants and then also having a category for savings. Called the 50/30/20 rule, this method divides after-tax income in this way:

• 50% towards needs

• 30% towards wants (or discretionary expenses)

• 20% towards savings

This isn’t the only way to create a personal budget, though. There are plenty of budgeting resources to help you find the method that works best to manage your money.

The Takeaway

Gas prices can take a chunk out of the budget but by understanding a few important principles, you can help improve your gas mileage and make the most of the money you spend at the pump. Doing so can be part of taking control of your finances and managing your money well.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.

Photo credit: iStock/FG Trade

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Aug

2023

10 Signs You’re Living Beyond Your Means

By Diana Kelly Levey | Budgeting & Goals, Financial Independence, money | Comments Off

Living beyond your means can easily happen. Typically, it’s a case of your spending outstripping your earnings. This in turn means it’s hard to pay off debt and save for your financial goals.

Sound familiar? If you find yourself running out of money before the next payday, you could be leaving above your means.

Here, learn more about this issue and the warning signs. Then you can begin to ake action and take control of your money.

What Does “Living Beyond Your Means” Mean?

Simply put, ”living above your means” means that you are spending more money than you are earning. People are able to do this by relying on credit cards, loans, and pior savings to cover their expenses. However, the process is not sustainable, and eventually overspending is likely to catch up to you.

Living beyond your means can also mean that you’re spending everything you bring in, and, as a result, don’t have anything left over for saving or investing, such as building an emergency fund, saving for a short-term goal like buying a car or a home, or putting money away for retirement.

Here are ten red flags that you’re living a lifestyle you simply can’t afford — and tips for how to get back on track.

1. You Live Paycheck to Paycheck

If most or all of your paycheck is spent immediately on bills, and you don’t have anything left over at the end of the month to put into savings, you are likely living over your means and may need to make some adjustments.

If your current lifestyle has become a habit, you may feel there is no place to cut back. However, if you get out your monthly statements for the past three months and take a close look at where all your money is going each month, you will likely find places where you can cut back on spending. This might be ditching cable, cooking (instead of ordering take-out) a few more times per week, or quitting the gym and working out at home.

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2. Your Credit Score Has Dropped

If you’ve been putting a lot of your expenses on your credit card and/or don’t always pay your bills on time, you may see your credit score take a hit.

This number is important because it can be accessed by anyone considering giving you new credit and may be used to determine the interest rate you’ll pay on a home or car loan, and also new credit cards.

If you aren’t sure what your credit score is, you can get a free copy of your reports from all three credit bureaus at www.annualcreditreport.com .

Looking it over can help you understand why your credit score has dropped, and help you take the necessary steps to repair it.

For example, you might set up automatic payments for the minimum amount due on credit card bills and loans, so you never miss a payment.

You may also want to pay down your balances on your credit cards and lines of credit. This can lower your “credit utilization rate” (how much of your credit limit you are using), which is factored into your score.

Recommended: What Is Considered a Bad Credit Score?

3. You’ve Stopped Your Retirement Contributions

If money is feeling a little tight, you may feel that now is not the time to worry about retirement. But you likely won’t be able to work forever, so it can be wise to make saving for retirement a priority and to get started early.

Thanks to compounding interest (which is when the interest you earn also starts earning interest), the earlier you start investing in a retirement fund, the easier it will be to save enough money to retire well.

You don’t have to contribute a lot. Even just putting aside a small amount of each paycheck into a 401(k) or IRA each month can help you build wealth over time. This move can get you on track to meet your financial goals.

4. A Big Portion of Your Income Goes to Housing

Keeping your rent or mortgage below 30% of your monthly pre-tax income is sometimes recommended because it can leave you with enough income left over to save, invest, and build wealth in general.

Staying below 30 percent can be difficult, however, if you live in a region of the country where the cost of housing is high.

Nevertheless, spending a lot more than a third of your income on housing can leave you “house poor,” and put your other financial obligations at risk.

If you find that your housing costs are taking too large a chunk of your monthly paycheck, you might consider downsizing, taking on a roommate, or finding a way to increase your income with a side hustle.

5. Your Savings Account Isn’t Growing

Another sign you may be living beyond your means is that your savings have stagnated.

Making regular deposits into your savings account–in addition to your 401(k) or IRA–allows you to work towards your short- and medium-term financial goals, such as putting a downpayment on a home or a car or going on vacation.

6. You’ve Been Charged an Overdraft Fee More than Once This Year

An overdraft fee — or “non-sufficient funds fee” — is charged when there’s not enough money in your account to cover a check or debit card payment.

Mistakes happen, and a one-off overdraft isn’t necessarily an indicator of overspending. But repeat offenses can be a sign that you are living too close to the edge and don’t have a clear picture of how much money is going into your account and how much is going out.

You may want to start tracking your spending and keeping a closer eye on your spending account to make sure you always have enough to cover your electronic payments.

Recommended: Using a Personal Cash Flow Statement

7. You’ve Never Set a Budget

Many people think making and following a budget will be too complicated. But having a budget can actually simplify your spending decisions by letting you know exactly what you can and can’t afford.

Having a budget also helps to ensure you have enough money to cover essentials, fun, and also sock some away in savings.

If you’ve never set financial parameters for yourself, you may want to consider taking an honest inventory of how much you are bringing in each month and how much is going out each month.

Once you get a sense of your own patterns and habits, you can work toward building a realistic budget that allows you to spend and save more wisely.

8. You’re Leasing a Car You Can’t Afford to Buy

Leasing a vehicle you would not be able to purchase outright or finance can be a major financial red flag. Leasing lets you rent a high-end lifestyle, but many people end up with leases they really can’t afford.

You might be covering your monthly payments, but if you can’t do that while meeting your other expenses and also putting money into savings, then your car is likely too expensive.

You may want to consider downgrading your vehicle or saving up enough money to buy a car — either outright or by making a solid downpayment so your monthly payments are low.

9. You’re Only Making Minimum Payments on Credit Cards

It’s fine to use your credit card to pay for everyday expenses and the occasional big purchase. But if you can’t pay off most of the balance each month, you’re likely living beyond your means.

Rather than give over part of your paycheck just to interest each month, you may want to cut back on nonessential spending and divert that money towards paying off your balances.

10. You Don’t Have an Emergency Fund

Not having a stash of cash you can turn to in a pinch can be a sign that you’re overspending. You may be gambling on the fact that nothing will go wrong. But life is unpredictable, and getting hit with an unexpected expense you can’t pay for can lead to a financial crisis.

Instead, you may want to build an emergency fund that can cover three to six months worth of living expenses. That way, you’ll be covered should something happen, such as an illness or injury, job loss, housing issue, or any other expensive personal matter should come up.

The Takeaway

Unfortunately, living beyond your means is all too easy to do. And while a few weeks or months of spending more than you earn may not be a major problem, overspending on a regular basis will likely catch up to you in the form of high debt and neglected savings.

Creating (and sticking to) a spending budget can help ensure that you can afford your bills and basic expenses, and still have money left over to save for the things you want in the future.

Ready to get better control of your spending? The right bank can help.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.

Photo credit: iStock/urbazon

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How to Sell a Car You Still Have a Loan On

How to Sell a Car You Still Owe Money On

Gather Important Info

Determine If You Have Positive or Negative Equity

Pick a Selling Option

Get up to $300 when you bank with SoFi.

Selling a Car to a Used Car Dealership

Selling a Car Privately

Trading In a Car You Still Owe Money On

The Takeaway

When Should You Pay in Cash?

The Benefits of Cash

You May Get a Discount

It Can Help You Avoid Overspending

There Are Fewer Security Risks

You Can Avoid Fees

Get up to $300 when you bank with SoFi.

Times When You Should Pay in Cash

Your Tab is $10 or Less

When Shopping at a Small or Local Business

You Want to Keep Advertisers at Bay

Times When You Shouldn’t Pay With Cash

Buying a House

Business Expenses

Paying Service Providers

Renting a Car

You’re Looking to Build Credit

When Buying Electronics

You’re Looking to Track Your Spending

Alternatives to Using Cash

Cash vs Credit Cards

Cash vs Debit Cards

Cash vs Financing or Loans

The Takeaway

Are You Bad with Money? Here’s How to Get Better

4 Signs You’re Bad With Money

You Tend to Live Paycheck to Paycheck

You Don’t Have an Emergency Savings Fund

You Only Make the Minimum Payment on Your Credit Cards

You Often Overdraft Your Account

Get up to $300 when you bank with SoFi.

How to Be Better With Money: 11 Tips

1. Setting Some Specific Money Goals

2. Tracking Your Cash Flow

3. Coming Up With a Budget Method That Works for You

4. Curbing Impulse Purchases

5. Thinking About Larger Spending Cuts

6. Automating Your Savings

7. Bringing in More Income

8. Listing All of Your Debts

9. Knocking Down Debt One at a Time

10. Avoiding More Credit Card Debt

11. Contributing More to Your 401(k)

The Takeaway

7 Easy Ways to Improve Your Gas Mileage

How to Improve Gas Mileage

1. Reduce the Weight

2. Watch Your Speed

3. Keep Tires at Optimal Pressure

4. Monitor Your Driving

5. Plan Your Gas Stops

6. Road Trip Wisely

7. Cold Weather Strategies

Myths About Gas Mileage

1. Refueling When Cool

2. Changing the Air Filter

Budgeting for Gasoline and More

The Takeaway

10 Signs You’re Living Beyond Your Means

What Does “Living Beyond Your Means” Mean?

1. You Live Paycheck to Paycheck

2. Your Credit Score Has Dropped

3. You’ve Stopped Your Retirement Contributions

Get up to $300 when you bank with SoFi.

4. A Big Portion of Your Income Goes to Housing

5. Your Savings Account Isn’t Growing

6. You’ve Been Charged an Overdraft Fee More than Once This Year

7. You’ve Never Set a Budget

8. You’re Leasing a Car You Can’t Afford to Buy

9. You’re Only Making Minimum Payments on Credit Cards

Student Loan
Refinancing

Personal
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