Dec
04
2024
19 Tips on Saving Money on Pet Care

19 Tips to Save Money on Pets

By | Budgeting & Goals, Family Finances, money | Comments Off on 19 Tips to Save Money on Pets
This content may include information about products, features, and/or services that SoFi does not provide and is intended to be educational in nature.

America loves its furbabies. As of 2024, 66% of U.S. households (86.9 million homes) own a pet. That’s a lot of snuggles and pats, but they do come at a price. A price that, thankfully, is more negotiable than you think, without skimping on love or care.

Pet parents are vulnerable to the same heartstring tugs that parents of human babies feel. You want to keep them happy and healthy, paving the path to a long life, and you are willing to pay the price.

Smart shoppers, however, know how to save money on pets and where they can safely trim costs. Here, we offer 19 tips for lowering costs.

Key Points

•   Buy prescription and over-the-counter pet medicines online for lower prices.

•   Keep up with vet appointments to prevent costly health issues.

•   Adopt pets instead of buying to save on initial costs.

•   Groom pets at home to avoid expensive grooming services.

•   Buy pet food in bulk to save money.

Common Pet Costs

Whether you select a Labradoodle from a breeder on a rustic Pennsylvania farm, adopt a tabby kitten from a crowded West Coast shelter, or anything in between, you will likely face these basic expenses:

•   Neutering or spaying

•   Collar, leash, harness

•   License fees

•   Microchipping if you choose, to track a lost pet

•   Vaccinations

•   Food, treats, and toys

•   Vet bills

•   Boarding or pet care if you travel


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19 Money-Saving Tips for Pets

Pet care can get pricey. Hidden fees can pad your expenses, and even if you pay the average cost of pet insurance, your critter’s care may not be cheap.

But you can make costs more manageable. Be sure to comparison-shop and ask friends and neighbors for recommendations. These tips will also help you navigate the road to being a good pet parent without going broke.

1. Buying Pet Medicines Online

When the vet prescribes meds, it’s to help heal whatever is ailing your pet. Sites like Chewy.com and PetMeds.com generally charge less for prescribed pills and ointments than your vet’s office. They also typically sell heartworm, flea and tick, and other non-Rx medicines at lower prices. You can typically schedule autoship and qualify for free shipping at a certain spend threshold.

Recommended: 5 Ways to Achieve Financial Security

2. Keeping Up with Vet Appointments

Keeping up with preventive care can be an example of how to save money on pets. Better to stay on track than skip well visits and find out an eye infection has gone untreated or that your pet has heartworm (generally detected in a routine stool sample test). A vet will typically check joints, ears, eyes, teeth, and weight, and keep your pet up to date on vaccines. (Some areas offer free rabies vaccination clinics. Check your town website.)

3. Researching Pet Insurance

Pet health insurance can cover well care or illness/accident treatment, depending on the policy, and averages $27 a month for a cat and $51 a month for a dog (for a policy that covers 80% of bills after a $250 deductible, with a $5,000 annual cap). It’s advised to insure a young pet; later, a pre-existing condition may prevent coverage.

But let the buyer beware: An online search can produce a dozen lists of the “best” insurance, but most are on sites that make money from a brand if you click and purchase. Check to see if your “human” health insurer has a pet policy. Other reputable organizations, such as the ASPCA, offer pet insurance, too.

4. Walking Your Pet Yourself

If you are home to walk your pooch, you can save a bundle. Professional dog walkers can get pricey, with rates ranging between $10 and $35 per 30-minute walk. You’ll pay even more for group doggie daycare. The going rate for a hired kitty sitter is often about $20 for 20 minutes. Doing the job yourself or asking a young person in the neighborhood to step in can be the most money-smart option.

5. Adopting Instead of Buying

Learning how to budget for a dog? It’s generally more affordable to adopt from a shelter or rescue organization than to buy a pet from a breeder or pet store. Standard adoption fees for dogs can range from $129 to $767; for cats, costs typically run from $39 to $317. Fees may vary by breed but typically cover a veterinary evaluation, vaccinations, deworming, flea/tick treatment, and the cost of spaying/neutering.

Recommended: Guide to Practicing Financial Self-Care

6. Spaying and Neutering Your Pets

If it’s costly enough to house and feed one dog or cat, what will happen if she delivers a whole litter? Spaying and neutering is the safe, recommended option for dogs and cats.

7. Researching Human Food Pets Can Eat

Avoid chocolate and other foods that can be toxic to pets (the Humane Society lists potential poisons ). Otherwise, though, some owners make their own say, rice, steamed carrots, and chicken dinner or dog biscuits (using ingredients such as peanut butter, oatmeal, and/or pumpkin). There are even some doggos with refined palates who turn up their nose at store-bought biscuits but love the home-baked ones.

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8. Buying a Smaller Pet

The bigger the pet, the higher the cost may run to feed, house, and even board or travel with the critter. So before you set your sights on Lassie or Marmaduke, think it over. Can you afford a large pet? A smaller animal may be a cheaper pet to own.

9. Storing the Pet’s Food Properly

Safeguard your pet’s nutrition; you don’t want to waste your investment. Keep dry kibble tightly sealed in a cool, dry place. House mice love to hoard and nibble it. Store any refrigerated pet foods in the fridge and check expiration dates.

10. Joining a Loyalty Club at a Pet Store

Consider signing up for no-cost rewards programs at stores like Petco and PetSmart to earn coupons or discounts. When you enroll in the PetSmart Treats Program, for example, you can earn points for every $1 spent in stores and online and redeem them on services including Grooming Salon, PetsHotel, Doggie Day Camp, and Dog Training.

11. Making Your Own Pet Furnishings & Toys

Here’s how to save money on pet supplies: Get creative. Why buy a cute tent for your kitten? The rascal will prefer to curl up in an open sock drawer or suitcase, or inside a shopping bag. Toys? Cats adore an empty box, a ping-pong ball, or an empty paper towel tube. For dogs, forfeit a designer bed. A cute, washable throw rug on sale makes a soft sleeping pad.

12. Buying Pet Food in Bulk

If you’re driving distance to an animal feed store, price dry pet food in bulk. You may save a bundle. Costco also sells pet food and supplies in multi-packs, a bargain compared to the supermarket.

13. Grooming Your Pet at Home

Shampoos, blowouts, and pink satin bows at the groomer are pricey, and keeping a curly dog coat from matting and knotting requires frequent visits. Early on, get your pet used to at-home grooming. Buy the right tools to clip your cat’s nails and trim your dog’s hair. Brush their teeth and clean their ears, too. You can save a nice amount by DIYing it.

14. Shopping Pet Goods at Discount Stores

Below-retail stores like T.J.Maxx and HomeGoods carry pet holiday costumes, beds, and bowls. Dollar stores often stock pet items, too. (As with human food, check expiration dates on discounted pet food.)

15. Finding a Veterinary Discount Plan

Your job could help you cut petcare costs. Some workplaces offer the perk of being pet-friendly, eliminating the need for doggie daycare or a professional walker. Others provide pet health benefits for employees. Pet Assure can help you know how to pay vet bills because they lower costs at clinics in the network; ask your HR department about it.

16. Training Your Pet Yourself

To save money on obedience training, learn the basics with a guidebook and YouTube videos, or sign up for more affordable group classes at a big-box pet store.

17. Handling Your Pet’s Dental Care

This can take a big bite of your budget, especially when a dog’s teeth decay, requiring anesthesia for extractions. Ask your vet early on about the best brush and toothpaste, how often to brush, and recommended dental chews.

18. Finding Cheaper Pet-Friendly Hotels

It can be challenging to find a hotel that accepts pets when you’re traveling, and harder still to find one that doesn’t add a surcharge for the privilege.

Nearly all Red Roof Inns welcome one pet for free and charge $15 per night for the second pet. (They can’t top 80 pounds, so maybe not an option if yours is Clifford-size.) Other hotels may charge up to $50 or more per night or up to a $75 pet fee per stay, on top of your rate as a human. Doing your research before you hit the road can help you identify the cheapest way to travel with pets.

19. Getting Free Secondhand Crates and Carriers

Rather than buying new, check swap sites for dog crates and cat carriers, or ask on your Facebook page. Many people no longer have a pet but still have a crate or carrier in the basement. As any new parent knows, the importance of saving money is an even bigger issue when you add a new member to your household, even if a canine or feline.

The Takeaway

Owning a pet can be costly, from vet visits to food bills. But the roughly 87 million families and singles with pets is a number that’s growing because of the unconditional love and loyalty a furry friend can bring. You can find plenty of ways to embrace the affection but trim the costs, from DIY grooming and dental care to bargain-hunting at discount stores for accessories.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.


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.

FAQ

Are pets worth the expense?

While it’s a highly personal assessment whether a pet is “worth it,” the fact that roughly 87 million U.S. households own pets says a lot about how much people value them. Pets can’t pay us back in money but do lavish intangible dividends, such as love, friendship, joy, loyalty, and companionship. These are gifts you cannot put a price on.

How much does a typical pet cost?

Standard adoption fees for dogs can range from $129 to $767; for cats, costs typically run from $39 to $317. If you buy an animal, there’s a wide range of costs. You could spend very little with someone locally whose cat had a litter or you might pay top-dollar for a purebred dog. After the first year, cat owners can expect to pay from $710 to $2,865 a year and dog owners can expect to pay from $1,000 to $5,225 a year in standard expenses.

What is generally the biggest expense to owning a pet?

Typically, the biggest expense of pet ownership is vet care. A new pet will cost more, due to spaying/neutering. But even after that, you can easily spend several hundred dollars annually to cover well checks and vaccines. For this reason, some people investigate pet health insurance to help with the cost.

Photo credit: iStock/alexei_tm

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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.

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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.

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Dec
04
2024
Cheap Ways to Live: 12 Low Cost Housing Alternatives

13 Cheap Ways to Live

By | Budgeting & Goals, Financial Independence, money | Comments Off on 13 Cheap Ways to Live
This content may include information about products, features, and/or services that SoFi does not provide and is intended to be educational in nature.

The cost of housing is the biggest living expense for most people, and lately, it’s been rising fast. If you’re struggling to make ends meet, finding cheaper housing alternatives could be the solution to mending your money woes. There are less expensive ways to live that don’t involve selling your worldly possessions and couch-surfing indefinitely. With a little creativity, and a willingness to simplify your life, you may be able to find affordable, comfortable housing.

Key Points

•   Explore moving to cheaper areas to significantly reduce housing costs.

•   Consider living in unconventional spaces like RVs, tiny homes, or shipping container homes for affordability.

•   Renting out a room or becoming a live-in caretaker can lower expenses.

•   Living on a boat or abroad offers unique, cost-effective housing options.

•   Mobile homes and guest houses provide budget-friendly living alternatives.

What Is Considered Affordable Housing?

The average American spends $2,120 per month on living accommodations. A sound financial goal is to allot 30% of your gross monthly income toward your housing budget, including electricity, heat, and water.

The cost of living by state can vary tremendously, but with rents and utilities rising across the country, the suggested 30% rule can be unrealistic. In certain cities and areas with a high cost of living, housing can eat up 50% of a person’s budget, straining their ability to save and meet financial goals.

13 Cheap Housing Alternatives

When thinking about the cheapest ways to live and trying to open up some breathing room in your budget, ask yourself, “Is my housing situation affordable?” If you are living paycheck to paycheck and not saving, your living situation may have to change. Fortunately, there are a range of possibilities when it comes to seeking cheap housing.

Here are 13 housing alternatives to help cut the cost of living and bring balance to your budget.

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1. Moving to a Cheaper Area

When looking for cheaper accommodations, one of the biggest moves you can make is a literal one: Move to a place with lower housing costs.

For instance, the costs of the Los Angeles housing market are typically far more than in rural Idaho. Your choice of locale can add hundreds, sometimes thousands of dollars to your monthly bill.

If your job and life situation permits, you could look for a less pricey neighborhood nearby or something more affordable that is within commuting distance of your work. If that doesn’t help make ends meet, it might be wise to consider relocation to another state where the rents are cheaper.

Unfortunately, relocating can be expensive. It can be difficult to tabulate how much money you’d need to move. Resettling in another state may involve the cost of typical moving expenses and supplies, getting a new license and vehicle registration, and other costs.

2. Living in a Recreational Vehicle (RV)

The use of recreational vehicles surged during the pandemic, with people itching to get out of their quarantines and onto the open road. Having an RV can do more than satiate your wanderlust, it can be an affordable housing option.

While a new RV is not cheap, you can find used ones for around the price of a used car. Despite their somewhat restrictive quarters and the constant need for parking, the sense of freedom, including financial, could be worth it, especially if you’re a nature lover. While it may not be a forever move, it can give your budget a break for a while.

3. School Bus Homes

Here’s a quirky way to live more cheaply for a period of time: Get on the bus. A converted school bus is cheaper than an RV. A used school bus can run between $3,000 and $10,000 dollars.

The interior renovations are the biggest cost factor. A school bus conversion, complete with hookups for electricity and water, can cost $20,000 to $30,000.

Parking can be an issue, so do your homework first on everything from national forests to a friend’s roomy property in terms of where to pull up.

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4. Living on a Boat

Perhaps you prefer life on the water vs. life on the road. In that case, choosing a boat as your primary residence could satisfy your inner sea captain and your financial needs.

Not including the cost of a boat, maintaining your nautical lifestyle can run an average of $500 to $2,000 monthly for a couple. But you can reduce your costs by spending more time at sea and less on marina fees. Of course, if you have a Monday-to-Friday office job, this will be a challenge. For those with flexible or work-from-home schedules, it could work.

5. Living Abroad

With the cost of living rising in the U.S., some people are looking beyond the borders for affordable housing. Your dollar can go far in places like Vietnam, Costa Rica, and Thailand, as long as you can work and procure the proper visas.

However, establishing a permanent residency in a foreign country can be tricky, and shipping your stuff internationally can be a hefty expense. You’ll want to do the research and do the math before making a move, but it could be an option — and an adventure — for some.

6. Renting a Guest House

You can lower your housing costs by moving into a garage apartment or a mother-in-law suite in someone’s home. What you sacrifice in space and privacy can be made up in savings on rent and utilities. If a friend or acquaintance has one to let, great. Also look at the usual rental listings for options on this front.

Recommended: How Much Should I Spend On Rent?

7. Living in a Mobile Home

What else is among the cheapest ways to live? Purchasing or renting a mobile home can be way more affordable than an apartment or house. Utilities are sometimes included, but be sure to factor in the costs of the lot fees, community fees, and other charges imposed by the trailer park landlord.

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8. Moving into a Tiny Home

Tiny houses have exploded in popularity, popping up on TV shows and social media feeds. The term describes compact dwellings of no more than 600 square feet or so, with many of them being just 225 square feet. If you don’t have enough of a down payment for a traditional house, a tiny home offers a more budget-friendly alternative and hip design options. The cost of a 250- to 300-square-foot prefab tiny home runs between $30,000 and $80,000, a fraction of the figure for a full-sized home.

Not ready to commit to close quarters? Renting a tiny house can run between $600 and $900, still cheaper than a lot of apartment rentals. But you may have to pay for storage for all your oversized belongings.

9. Living in a Shipping Container Home

Believe it or not, one of the newest cheap ways of living can involve cutting-edge high design. Repurposing shipping containers into industrial-chic small homes has become a trend lately. These containers are way cheaper than a house and can be configured in unique ways, combining multiple containers for more square footage.

In terms of how much you’ll spend, converting a container to a livable space with one bedroom and a bath could cost you $25,000 to $82,000.

10. Living as a Live-In Caretaker

If you’re looking for employment as well as more affordable housing, being a live-in caregiver can be an ideal situation. You could look after an elderly or disabled individual in exchange for a free room and a monthly salary. Another option is being an au pair or nanny, which can work well if you love kids.

11. Being an On-Site Property Manager

In terms of finding cheap ways to live, you might explore becoming an on-site property manager if you’re handy. You’d be responsible for superintendent-type duties — garbage removal, cleaning common areas, and the basic upkeep of the building — in exchange for low-cost or free rent.

12. Renting Out a Room in Your Home

Here’s a way to save on housing costs that flips the script. If you are fortunate enough to have a spare room in your house or apartment and don’t mind having a roommate, renting out your extra space can cut your expenses significantly. Just be sure to properly vet the renter before agreeing to an arrangement.

Recommended: 39 Passive Income Ideas to Build Wealth in 2024

13. Move in with Friends or Family

If you need to cut housing costs to the bare bones (perhaps you’re trying to financially survive a layoff), think about family members or close friends who could make room for you. In some cases, you may be able to pay no rent but contribute to the household via cooking, cleaning, and other chores.

While likely a temporary move, it can give you time to save up some funds and, if necessary, break out of habits that make you bad with money and prepare to get your own place again.

The Takeaway

Housing costs can take a big bite out of your budget. If you want to save money or stop living beyond your means, reevaluating your housing situation is a great place to start.

If you are willing to be flexible, and a little unconventional, you can secure an affordable home that suits your lifestyle and your bank account.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.


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.

FAQ

Is living cheaply worth it mentally?

Living cheaply and within your means can typically bring financial peace of mind and allow you to save for the future. However, if taken to an extreme, frugality can cause some people a high level of stress.

What are the hidden costs of living in affordable housing?

While affordable housing can save you money down the line, there are expenses such as down payments, first-and-last month’s rent, security deposits, and the costs of moving or storage units to consider. Also look out for broker’s fees when renting if cheap ways to live is your goal.

Are there monthly rent payments at mobile homes?

Yes, you can rent a mobile home by the month. Be sure to ask the landlord about common fees, who covers utilities, and other potential additional costs. Different properties have different policies, and you don’t want any surprises if you move in.

Photo credit: iStock/Marje

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.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Checking & Savings Fee Sheet for details at sofi.com/legal/banking-fees/.

SOBNK-Q424-038

Read more
Dec
04
2024
What to Do When Someone Asks for Money

What to Do When Someone Asks for Money

By | money | Comments Off on What to Do When Someone Asks for Money

Dealing with people who ask for money can be uncomfortable, and it can put a strain on even the best of relationships. You may feel pressured to say yes when you can’t really afford to. Or you may get tired of handing over your hard-earned cash to someone you view as being financially irresponsible.

Having a strategy for answering when someone asks for money can make those situations feel less awkward — and keep you from making a poor financial decision.

Key Points

•   When someone asks you for money, assess your financial situation to ensure lending won’t jeopardize your stability.

•   Determine if the request for money is for a genuine need or simply a want.

•   Understand the risks involved in lending to friends and family, including potential non-repayment.

•   Offer alternatives like paying expenses directly or non-financial help.

•   Avoid guilt-driven decisions and be sure to prioritize your own personal financial goals.

Determining if You Have the Funds to Help First

Any time someone asks for money, there’s an important question to ask before you consider saying yes: What can I afford?

Giving friends money when they’re in a jam could make you deplete your bank account if your budget is already strained. So before agreeing to hand over any cash, review your financial situation first to see how much money you can realistically part with.

This is especially important when someone asks for money, and it’s more than just a few bucks. Say your aging parents ask you for $10,000 to help with medical bills, for example. That’s not exactly pocket change. Talking to parents about money may not be easy but if you can’t afford to part with that kind of money, it’s important to say so upfront.

Recommended: Guide to Practicing Financial Self-Care

Determining if It Is for a Genuine Need or Financial Situation

When someone asks for money, it’s natural to want to know what it’s for. And that might play a part in your decision to say yes or no.

For example, there’s a big difference between your younger sibling asking you for $1,000 to put a security deposit on an apartment and asking for $1,000 to buy a gaming console. One is a need, while the other is a want.

If you’re constantly dealing with family members or friends who ask for money to fund their desired lifestyle, you may begin to feel that you’re being taken advantage of. So it’s okay to set boundaries and specify that you’re only willing to give friends and family money in situations where there’s a genuine need.

However, be wary. Some people might use their hard-earned money on things like, say, the latest mobile device or a weekend away, and then come knocking for cash when a student loan or medical bill is due. Again, you don’t want to fund someone’s extravagant lifestyle.

Understanding the Risk Involved With Lending Money

Borrowing from friends and family isn’t the same as getting a personal loan from a bank. If someone asks you for money, they probably aren’t expecting you to whip out a loan agreement or charge them fees and interest, for instance. And they might assume that if they don’t pay you back, you won’t bombard them with collection calls the way a traditional lender would.

When you lend money to friends and family, you’re taking on risk. If they don’t pay you back, then you likely won’t be able to get that money back unless you’re willing to sue them in small claims court. When debts between friends or family members go unpaid, that can lead to the eventual breakdown of the relationship.

If people who ask for money regularly seek you out, there are two ways you can try to manage the risk factor:

•   Require them to sign a loan agreement

•   Consider the money a gift

The former can give you some legal protection if they don’t pay, but some people might balk at having to sign it. The latter, meanwhile, eliminates all risk since you’re assuming you’re never going to get the money back anyway. But you have to be sure beforehand that you can afford the loss.

Also, be aware that it may change the nature of your relationship with the person to whom you are gifting the money. Consider whether you want to set a precedent of bailing out, say, your younger sister’s or your fiancé’s finances.

Recommended: 5 Ways to Achieve Financial Security

Paying for Things Directly Instead of Gifting Money

If you’re not comfortable giving cash to friends or relatives who ask for money, you could offer to pay for things for them instead. If your best friend asks for $300 to pay their electric bill, you might not feel 100% sure they’ll use the money for that. You could offer to pay the bill for them instead.

You might also consider offering non-financial help. For example, if you have a cousin who is a struggling single parent and often requests cash, you might offer to watch their kids for free so they can spend time looking for a higher-paying job or take night classes to advance their education. You’re still helping them out, but you’re not giving them permission to turn to you for money every time they need it.

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Watching Out for Your Financial Goals

Saying yes when someone asks for money can be problematic if it means your financial goals suffer. Going back to the example of aging parents, helping them pay for medical bills or other expenses in retirement could mean that you’re shortchanging your own financial future.

Again, it all goes back to looking at how much you can afford to give and whether you’re comfortable giving money to friends and family, knowing that you might never see that moolah again.

If doing so would put your money goals at risk, it’s important to consider whether helping them out is truly worth it, especially if the money they’re asking for is to fund wants rather than needs.

Learning From Your Mistakes

If you’ve gotten into the habit of automatically saying yes when people ask for money or you’ve given someone money in the past and regretted it, it’s not too late to correct those mistakes.

For example, say you have that one friend who, when you dine out, always asks if you can pick up the tab when the check arrives. Maybe they say they haven’t gotten paid yet and that you are lucky to earn a higher, dependable salary.

Remember, it’s perfectly okay to say, “I can’t afford to keep picking up the tab for dinner. What’s another way we can enjoy time together without spending as much?”You could suggest that instead of going out, you do potlucks at home instead. This could help you to avoid feeling like you’re being taken advantage of.

If you feel like you’ve made a mistake with money by lending it or giving it to friends and family, don’t shy away from it. Analyze the situation to figure out what went wrong, then commit to not repeating those same mistakes again. Just because you gave a person money in the past doesn’t mean you must continue to do so.

Teaching Them Smart Financial Habits

If you find yourself dealing with someone who asks for money on a regular basis because they’re terrible at managing their finances, you could offer to help. For example, you might introduce them to some online resources for learning about money or share your favorite budgeting app or savings calculator with them.

Keep in mind that this doesn’t always work. If someone has learned poor financial habits from an early age and doesn’t seem inclined to change them, you may not be able to put them on a different path. In that case, you may need to kindly but firmly say no to their frequent requests for money and know that you tried to improve their situation via education.

Providing Financial Resources to Help Them

If someone asks for money and you either can’t afford to give it or would prefer not to, you can still point them in the right direction. You can help them explore other ways to borrow money, such as personal loans, lines of credit, or credit cards.

Just be mindful of steering them toward loans that might worsen their financial situation. Payday loans, for example, can feature astronomical interest rates that can quickly lead borrowers into a downward spiral of expensive debt. Cash advances on credit cards are another very expensive way to borrow money that one may want to avoid.

Valuing Yourself and Your Hard Work

You work hard for your money, so it doesn’t make sense to give it away without some thought beforehand. A request in and of itself isn’t a good reason to part with your cash. For all you know, the person asked half a dozen people who said no before they came to you, and they may have several people they are planning on asking for funds if you decline.

When people ask for cash, check in with your money mindset. Don’t undervalue the effort it took for you to make it, even if that’s not something that’s on their radar. Also, be clear about how it will be used.

For example, finding out after the fact that the $500 you thought was going to buy groceries for your sister and her kids actually went to funding a trip to an amusement park might make you feel resentful. You may feel like your hard work to make that $500 was all for nothing since it went to a frivolous expense.

Not Giving Out of Guilt

Guilt can play a big part in influencing financial decisions. For example, perhaps your spouse’s parents gave you the money to put down on a home after you were married. That can lead to sticky situations with how to handle money with in-laws for years to come if they later need financial help and automatically expect you to provide it.

You may feel too guilty about the down payment gift to say no, which could put a strain on your finances or even your marriage. Or it may be your parents who are putting a guilt trip on you to justify asking you to pay for their expenses in retirement. Talking about money with your partner can help you to avoid conflicts in these kinds of situations.

Guilt can also come into play in other ways. For instance, you might feel guilty about making more money than your friends and use that as an excuse to always pay for nights out or give them money. But allowing guilt to guide you can lead to everyone you know treating you like a personal bank. So it can be important to not let guilt cloud your decisions, and feel comfortable saying, “No, sorry I can’t” to money requests without feeling obligated to explain your reasoning.

The Takeaway

Knowing how to navigate the conversation when people ask for money can make those situations less stressful. You don’t always need to say no, but it’s important to know when doing so makes sense for your financial situation — and your personal relationships. Whether you do or don’t choose to loan money to friends and family, it’s important to keep working toward your own financial goals by saving regularly.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

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.

FAQ

When should you say no to someone who asks for money?

It may be a good idea to say no to someone who asks for money if you truly can’t afford to give it or if you believe the money will be wasted on wants vs. needs. You should also consider saying no if you suspect the money will be used for illegal purposes.

How can we trust if someone is telling the truth?

There’s no way to tell if someone is being truthful, short of giving them a lie detector test. When someone asks for money, you essentially have to trust your instincts. If you suspect they might not be truthful about why they need the money, then you can say no.

How can I avoid disputes if I choose to say no?

Telling someone who asks for money that your answer is no could lead to conflicts. If you’re worried about a dispute, you can explain your reasons for saying no or simply say, “I’m sorry; it’s just not a good time.” Don’t allow them to argue with you or try to wear you down to change your decision.

Photo credit: iStock/Sergey Nazarov

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Checking & Savings Fee Sheet for details at sofi.com/legal/banking-fees/.

SOBNK-Q424-039

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Dec
04
2024

Guide to New Money vs. Old Money

By | Growing Wealth, money, Terminology | Comments Off on Guide to New Money vs. Old Money

The key difference between old money and new money is how a person obtained their wealth. Old money represents what may be called generational wealth — money that has been passed on from generation to generation in the form of cash, investments, and property. New money refers to self-made millionaires and billionaires, those who earned their money (or lucked into it, like in the lottery).

Learn more about this construct and why this distinction is made.

Key Points

•   Old money refers to generational wealth passed down through families, while new money refers to self-made wealth.

•   Old money is often associated with traditional investments and long-standing traditions, while new money may spend more lavishly and take riskier investment decisions.

•   Lessons from old and new money include the importance of protecting wealth, analyzing spending, and avoiding stereotypes.

•   Those with old money may face challenges ensuring wealth for future generations.

•   The distinction between old and new money may be relevant to the wealthy class but does not affect the daily lives of most people.

What Is Old Money?

Old money refers to people who have inherited significant generational wealth; their families have been wealthy for several generations.

In the past, old money would have referred to an elite class: the aristocracy or landed gentry. In the U.S., families like the Vanderbilts and Rockefellers represented early examples of old money. Today, old money families include the Waltons (Walmart), the Disneys (The Walt Disney Company), and the Kochs (Koch Industries). Should families like the Kardashians continue to generate and pass down the great wealth they have in their bank accounts or other assets, they could one day be considered old money as well.

Recommended: How to Build Wealth at Any Age

What Is New Money?

New money then refers to people who have recently come into wealth, typically by their own labor or ingenuity.

Common examples of new money include tech moguls and self-made billionaires like Jeff Bezos, Mark Zuckerberg, and Bill Gates. Someone who wins millions of dollars in the lottery or becomes famous from a reality TV series (like the cast of Jersey Shore) would also qualify as new money.

You may sometimes hear the French term “nouveau riche,” which means “newly rich.” This tends to describe people who recently became wealthy and spend lots of money from their checking account in a flashy, ostentatious manner.

Recommended: Building Wealth in Your 30s

Differences Between Old and New Money

So what is the difference between old money and new money? There are quite a few distinctions, but remember that these are all generalizations. Each person who obtains wealth is unique.

Source of Wealth

The most obvious difference between new money and old money is the source of wealth. Old money has been passed down from generation to generation. Each member of old money typically feels a fierce responsibility to protect — and increase — that wealth.

Members of new money have earned that money in their lifetime, whether for building a tech empire, becoming a famous actor, making it to the big leagues as a sports player, or even making money on social media as an influencer. Some new money members might come into money through a financial windfall like winning the lottery or a major lawsuit.

Long-Standing Traditions

Inheriting generational wealth comes with a responsibility: Old money recipients usually must protect the family’s wealth to pass on to future generations. For that reason, those who come from old money may stick to their traditional investments and ways of life. Many inherit their parents’ business and then pass it on to their own children.

Those who are self-made or come into money quickly do not have long-standing traditions to fall back on. They are often the first in their community to make multimillion dollar spending decisions. This can mean a steep learning curve and the need for guidance, which could make them vulnerable to poor advice and unscrupulous hangers-on.

Spending and Investing

How old and new money generally approach wealth management is one of their starkest contrasts.

Though they do live lavishly, members of old money can be more frugal (or calculated) with purchases than you might expect. For members of old money, spending is often more about investing than shopping for pleasure.

People who are a part of new money may feel more entitled to and excited by their funds. They may spend it more lavishly (and publicly). Some might feel that they worked hard to earn their money — and they’d like to enjoy it. They might want to show off their newly achieved status with designer watches or mega mansions.

That’s not to say that members of new money don’t invest. Famous celebrities, athletes, and businesspeople often invest in real estate or buy companies to increase their wealth. Generally speaking, new money might make riskier investment decisions for faster yields. They’re not thinking about generational wealth to protect with tried and true investment methods.

Taken to its extreme, this can have disastrous results. It’s not uncommon to hear stories of people who make a lot of money for the first time and spend it all, leading to bankruptcy and even mental health issues.

Recommended: How to Deposit a Check

Leisure

The stereotypes might be a little tired, but in general, people associate old money with traditional activities like golf, skiing, horseback riding, and polo. On the flip side, members of new money might buy courtside seats to a basketball game, a garage full of shiny new luxury cars, or even a rocketship for a joyride into outer space.

Recommended: Knowing the Difference Between ‘Rich’ and ‘Wealthy’

Social Perception

Interestingly, some of the richest people in the world come from new money. They’re today’s self-made tech giants. Yet some members of old money may consider themselves to be a higher class than the likes of Gates and Bezos.

To generalize, old money often perceive themselves — and are perceived by outsiders — to be more educated and refined.

On the other hand, the public may view members of new money as harder workers and more innovative — clear examples of the American dream.

Old and New Money Lessons

What can one learn from comparing old and new money? Even if you are not wealthy, you can learn some valuable life and financial lessons from considering the difference.

•   It’s hard to protect generational wealth. Old money is very privileged; there’s no denying it. But many families lose their wealth in just a few generations. Old money families do work hard to maintain and grow their wealth for their future generations. They are able to avoid seeing their fortune dwindle.

•   It’s important to analyze your spending. Many people who come into wealth quickly don’t take adequate steps to protect their funds and invest it wisely. Horror stories of lottery winners losing everything should be enough to serve as a reminder that — if a person comes into a large amount of money suddenly — they should take the time with a finance professional to build out their money management goals. Doing so may ensure your wealth grows, rather than runs out.

•   Stereotypes aren’t everything. Reflecting on the differences between old and new money, it’s important to note that these are merely stereotypes, and not everyone fits the bill. Just as one hopes that others don’t judge us before they know us, the discussion of old vs. new money is a reminder not to form assumptions about someone until you get to know them.

Recommended: How to Achieve Financial Discipline

The Takeaway

Old money refers to families who have maintained wealth across several generations. New money, on the other hand, refers to someone who earned their wealth in their lifetime. Key traits typically differentiate old vs. new money, but at the end of the day, both refer to members of an ultra-wealthy class.

No matter how much wealth you have — and whether you inherited or earned it — it’s a good idea to protect it in an FDIC-insured bank account that actively earns interest.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.


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.

FAQ

Is it preferable to be from new or old money?

It depends on whom you ask. Old money members often regard themselves as a higher class, but they also have less agency to spend their money on “fun” things, as they have to guard their wealth for future generations. While members of new money might feel freer to spend on things they want, they can be more likely to run out of money if they don’t follow good financial planning.

Does new vs. old money matter?

If you are a member of the wealthy class, the distinction might matter to you. Those with old money might feel it’s superior to new, but those with newly minted wealth may well be proud of their success in building their fortune. However, most people are not considered to be new or old money, and so this shouldn’t affect their daily lives.

How has old vs. new money changed since the terms were first coined?

Old money once referred to the landed gentry in Europe, but in today’s world, it might refer to a few families who struck it big a century or more ago in the U.S. New money is more common nowadays, with the advent of television, sports, and social media as the source of riches.

Photo credit: iStock/South_agency

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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.

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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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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Dec
04
2024
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How to Read a Preliminary Title Report

By | Home Ownership, mortgage | Comments Off on How to Read a Preliminary Title Report

When you’ve decided on a house to buy and entered into escrow, you can expect to receive a preliminary title report. The report will verify ownership and reveal any lurking issues that will not be covered under a subsequent title insurance policy.

This is an important step: When you’re buying a home, the preliminary title report gives you the chance to remove or eliminate problems before you close on the property. This can help you avoid any legal headaches that arise from those issues.

Here’s a look at how to read these documents and what kind of information you can expect to find in them, including what is a preliminary title report, how to read a preliminary title report, what is a title report vs. title insurance, and more.

Key Points

•   The preliminary title report reveals things that might impede a sale, allowing buyers to address them before closing.

•   The report includes the owner of record, statement of vesting, legal description, and exceptions.

•   Exceptions may involve liens, unpaid taxes, assessments, encumbrances, CC&Rs, and easements.

•   Title insurance protects against title disputes, with lender’s and owner’s policies available.

•   Understanding the report helps prevent legal issues and ensures a smooth property transfer.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

Title Insurance 101

First, you’ll need to understand what title insurance is. A title is the set of legal rights you have to a property once you buy it. A clear title is the goal, meaning you want the property to be free of liens and other ownership claims. You may have qualified for a mortgage, but you will need to resolve any title issues in order to get to the closing.

Title insurance protects both buyers and lenders against any problems with a title when ownership of a property transfers from one person to another. During or after a sale, if there is a title dispute, the insurance company may be responsible for paying certain legal damages. If you don’t have title insurance, you could be responsible for any issues that crop up.

There may be two forms of title insurance involved in a sale. If you are borrowing money to buy a home, you may purchase lender’s title insurance, which protects the lender. Owner’s title insurance, less common, is usually purchased by the seller to protect the buyer.

Reading a Preliminary Title Report

When you receive the preliminary title report, look for the following information:

Owner of Record

The preliminary title report will start with the name of the owner of record. If you’re buying a home, this should be the seller’s name. If it isn’t, that’s a major red flag, and you should let your escrow or title officer know.

Statement of Vesting

Next, the report will lay out the extent of the current owner’s interest in the property. The fullest type of ownership, and the most common, is known as “fee simple” or “fee.” This means a person wholly owns a piece of land and all the real estate on it.

There may be other types of ownership that will show up in this section. For example, you might see a leasehold estate, which gives a tenant exclusive rights to use a property owned by someone else for a set period of time.

Legal Description

The legal description details the property location, lot size, boundaries, and any easements or encroachments.
For condominiums and planned unit developments, the legal description might include common areas, parking, storage, and easements that convey.

A plot map, which shows how land is divided into plots, may be included as well to show the general location of a property.

Exceptions

Exceptions will be listed numerically and are matters that your title insurance policy will not cover. They may include:

•   General tax issues. Are there unpaid taxes? Property taxes will show up as the primary “lien” and as due or paid in full. Property taxes must be paid for the property sale to go through. And tax classifications could affect the new owner. For instance, if land is classified as agricultural, there could be penalties for withdrawing from that classification.

•   Assessments. Are there delinquent water or sewer bills owed to the city that need to be paid before closing?

•   Encumbrances. These might include liens from creditors or lenders, or liens for the payment of federal taxes or assessments. They might also include liens against a property because of back-due child support or spousal support. Are there loans against the property you weren’t aware of, such as additional mortgage loans?

•   Covenants, conditions and restrictions, also known as CC&Rs. These are rules that homeowners must follow in a planned community or common interest development. They might determine whether you are allowed to park on the street, what kind of fence you can put up, or what color you can paint your house.

•   Easements. An easement is the right another party has to the property you’re interested in buying. For example, neighbors may have a right of way that allows them to access their property through yours. Or a utility company might have the right to install, access, or maintain equipment on the property, such as power lines or cable.

•   Other issues. There are other matters that may appear on the preliminary title report, such as bankruptcies or notices of action, which are court proceedings that are underway and involve the property.

The transfer of property is subject to these exceptions unless they are dealt with by the seller before the sale.

If any liens or encumbrances crop on your preliminary title report, you have the chance to clear them before the sale goes through. Together with your real estate agent you can work with the sellers and their agent to clear the title before you take it on.

If you have any questions about your preliminary report, you can contact your real estate agent, an attorney, or your escrow or title officer.

Standard Exceptions and Exclusions

In addition to the list of exceptions that are particular to the home you want to buy, there are standard exceptions and exclusions that a title insurance policy won’t cover.

Building codes and restrictions are exempt from title insurance coverage, as are zoning restrictions or other regulations for how land can be used in certain areas.

Sometimes a building is subject to zoning restrictions. For example, it may be in a historical district that restricts how a buyer can develop the property.

Recommended: How to Make an Offer on a House

How to Get a Title Report for a Property

As part of the homebuying process, your lender will likely require a preliminary title report and title insurance.

In many cases, the seller will request the title report from a title company once an escrow account is opened. The seller includes this information as part of their disclosure package.

Recommended: Mortgage Pre-Qualification vs. Pre-Approval: The Differences

Title Report vs. Title Insurance

As mentioned above, once you open escrow, an order is placed with the title company to produce your preliminary title report. The company will assemble and review records having to do with the property you want to buy. The title report will give you insights into whether the property has, say, any liens on it or other issues.

Title insurance, on the other hand, is indemnity insurance. It protects both lenders and homebuyers from enduring financial loss if there were any defects in a property’s title. (Title insurance is different from homeowners insurance and you’ll need both.)

Limitations of the Preliminary Title Report

Be aware that the preliminary title report only shows the matters that the title company will exclude from coverage when and if a title insurance policy is issued.

It is not a complete picture of the condition of the property. And it may not even list all of the liens and other encumbrances that may affect the title of the property.

The Takeaway

Think of a preliminary title report like a background check on a home, revealing tax, lien, or ownership poltergeists lurking. Knowing how to read a preliminary title report helps prevent spooky surprises. It’s an important step in getting to the closing table and moving into your new home.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

Who should order the preliminary title report?

It is usually the seller’s responsibility to order the preliminary title report as part of their disclosures about the property. Work with your real estate agent to make sure the title report has been ordered to keep moving smoothly toward your closing date.

What could a preliminary title report reveal?

A title report will show who owns the property and could reveal liens, covenants, easements and other restrictions on the property. This gives you and the seller an opportunity to clear these up before the sale goes through.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

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.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

This article is not intended to be legal advice. Please consult an attorney for advice.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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