Not all credit cards are created equal. In fact, not all credit cards are credit cards. Some are what is known as "charge cards."
Charge cards are different from a credit card and different than a debit card.
A debit card is essentially a direct withdrawl from your bank account. Swipe your debit card and automatically this money is deducted. A debit card is used at ATM's etc. There is a bit of a risk to using a debit card for all of your purchases.
Think about it. If someone obtains this number, they essentially have direct access to your bank account. Although banks have safeguards and would usually alert you in the event of someone withdrawing large amounts of money.
If you bank with Wells Fargo, for example, your debit card will be with Wells Fargo.
Your charge and credit cards will be linked to your bank account but when you swipe either of these, the money is not automatically withdrawn.
So something I have experienced first hand (I like to share my poor choices with you all so you don't make the same!) is I am severely lacking in proving my creditworthiness for a few reasons.
Post college I was fortunate to have no student loans. No home (AKA no mortgage). No car note, etc. Basically, this just means I have no debts or money borrowed in which I have to repay. Which is DEFINITELY good in many ways.
One way it is bad, is that if I were trying to purchase a home, rent an apartment, lease a car, I have nothing to show that I am a good risk and that a bank should lend money to me.
I knew I needed to start building credit, so fresh out of college I applied for a credit card.
SYDNEY CORRECTION. I applied for a charge card.
Thinking I had done sufficient research, I sprung for the American Express Gold card. This card came with massive reward travel points therefore it was a no-brainer.
Now, American Express cards are NOT credit cards. They are charge cards. What's the difference?
A charge card MUST be paid in full every month. This was not an issue for me as I was only ever spending what I had in my bank account. You cannot roll your balance month to month as you can with a credit card.
This card forces you to watch your spending. If you can't pay, then you face a penalty. The benefit is that you never have to worry about paying interest on your balance.
The card above, the Chase Sapphire Reserve is a CREDIT card. Credit cards only require you pay some set minimum amount each month. As long as you make the minimum payment, you are able to rack up charges and carry them month to month.
This is beneficial if you are in a situation where you cannot pay your bills each month. You are buying on CREDIT; essentially being given a loan.
But this is not free. You are charged an Annual Percentage Rate (APR) on your outstanding balance.
Generally, if your credit score is lower, you will pay a higher APR as a penalty.
Quick recap on credit score. The FICO credit score scale goes from very poor at 300 to perfect at 850.
Your credit score is something you consistently need to work on because having a better credit score saves you money. A higher credit score shows you are a responsible borrower, therefore you will be charged a lower APR, insurance will be cheaper, etc.
So how did I find out my credit score is v mediocre?
So, this is also a note for people who live in large cities like myself who might not have a vehicle. I am no longer covered under my parents insurance. I had rental insurance on my condo and that was it.
Even though I don't have a car, I will occasionally drive my friends or families cars. Guess what? I wasn't covered. Long story short, if you live in a city and don't have a car you obviously don't need auto insurance because there is no car to insure. Be sure to look into an umbrella policy for liability suits and/or a non-owned policy (besides the point, just food for thought.)
Anyways, trying to purchase this insurance, I realized my credit score was extremely low. How? I pay my bill on the dot every month.
However, I have never been BORROWING any money. I have been using a charge card, my AMEX. Therefore even though it is borrowing in a sense, it is not figuring into my credit utilization rate.
I know, Mafee. It's confusing. Credit (or debt) Utilization Rate is what portion of your credit limit you are using to borrow (charge cards don't have credit limits.) If you have a $10,000 credit limit on your CREDIT card and have a balance of $1,000, your CUR is 10%. Lower is better. Spending less is better. Showing you are a controlled spender is key.
Having a charge card (as long as you pay it off,) doesn't hurt your credit score. It just doesn't help as much as a credit card. Credit limits are the main things reported to credit bureaus, hence the main way your credit score is calculated.
As it makes sense, getting a CHARGE card is more difficult than a CREDIT card. Being required to pay off your debts each month makes it necessary to have credit score of at least 700 in order to qualify.
Credit Card Insider
"They were practically GIVING it away." "I couldn't afford NOT to buy it!"
Sound familiar? I have definitely said both of these things before...OK...maybe more than once. Although, sometimes it might be said in jest...see below Birkin "sale".
WOW...a whole dollar! Makes a $13,500 purse look like a steal (kidding!)
The principle is true, however. When you see the word "sale" or "clearance," shoppers are more likely to buy said product because they feel like they are getting a deal. Bartering without the hassle of actually negotiating.
Our brains are manipulated into thinking we are getting a good deal by a thing called "anchoring." Behavioral economist, Dan Ariely, asked a class of MBA students to write down the last 2 digits of their social security number. They then held a mock auction. Students with a high number bid 346% more than students with a low number. A completely random number manipulated what they were willing to spend.
Now think back to the last time you were in a department store. One pair of shoes were $400, full price. Another were $2,500 but had been marked down to $999...which do you choose? The cheaper pair or the pair where you feel you're getting a deal?
Just like in the movie, Confessions of a Shopaholic (can anyone believe it didn't win an Academy Award?) Isla Fisher and the crowd of women above, flock to a sample sale where things are supposedly, massively discounted.
Whereas if you were at a department store, you might take a step back and think about the item. If you are led to believe everything is an incredible deal, you are much more apt to throw down your card immediately.
This is true for designer goods, TV's, cars etc. The MSRP (Manufacturer's Suggested Retail Price) is just that...suggested. $87,350 is the MSRP for the above Range Rover. If the dealer was willing to sell it to you for $7,000 less than the sticker at $80,000, would you think it was a deal? What makes you believe this ride is truly worth that amount? Because the company said so? Because celebrities push them around L.A.?
A lot of this has to do with comparisons. An article by USA Today discusses how comparisons make us feel superior. Having a nicer car than friends, living in a nicer house than our neighbors, carrying more expensive bags, etc. Call it human nature and human flaws!
Money does not buy happiness, but it sure buys everything else. However, living beyond your means or constantly buying, solely to "Keep Up With The Joneses", will probably lead to an unhappy life and an empty wallet.
Remember these "anchors" next time you're in the market for anything, big or small.
Original Piece: Jeff Stibel, author of "Breakpoint" and "Wired for Thought"
Most people have a bucket list or some version of a collection of places or things they would like to experience in their lifetime.
Davos, Switzerland is my nirvana. Now, although it is simply put, just a stunning place, I want to go for a specific reason. The World Economic Forum held each January.
This may sound like a real Sophie's Choice to many people, but this is a week I look forward to every year. The World Economic Forum (WEF) is a Swiss non-profit foundation. The international body cites it's mission as "committed to improving the state of the world by engaging business, political, academic, and other leaders of society to shape global, regional, and industry agendas".
In layman's terms, it is a gathering of about 2,500 businesspeople, celebrities and journalists to discuss the state of the world. The theme for the 2018 forum is "Creating a Shared Future in a Fractured World."
The subsidiaries of the company I work for, Marsh & McLennan Companies, are instrumental in helping put together the Global Risks Report. The report is about 70 pages discussing the worlds largest risks. I think it is vastly important to be aware of the emergence and development of these risks overtime. In this post, I am going to present a synopsis of what was included in this years report.
CNBC plays an integral role in the forum. Coverage of the panels and discussions with global CEO's begin around 2 A.M. EST. As an early bird, and this week being my equivalent of Christmas (I am that much of a geek!,) I am aggregating some of the most poignant and interesting comments and views from Davos 2018 which I will include following the risks.
The 2018 report begins with the top 5 global risks in terms of likelihood and impact. The charts date back to 2008 to show how risks change year over year. A risk, such as oil and gas price spikes were the highest in terms of likelihood in 08'. In 2018, cyber attacks and natural disasters take the top spots.
In terms of impact, 2008 was when we saw the Great Recession. Triggered by a large decline in home prices after the collapse of the housing bubble, this led to foreclosures nationwide. With this, the greatest risk in 08' was a collapse in asset prices. In 2018, weapons of mass destruction have made a comeback. This time, not as much from the Middle East, but from growing tensions with North Korea.
Personal Debt. The International Monetary Fund (IMF) predicts global GDP growth of 3.6% for 2017 up from 3.2% in 2016. This has led to improved sentiment. However, over the past 3 decades, 53% of countries have seen an increase in economic inequality. So what does that mean? High levels of personal debt, inadequate savings, and scaling back of pensions, are all reasons to proceed with caution in the years ahead, regardless of current positivity.
Income Inequality. This tends to go hand-in-hand with rising income and wealth disparity. The "rich get richer" argument. Experts are bullish on the positive effects technological innovations will have on businesses. It does, however, raise concerns of automation pushing down on levels of employment and wages, which could further deepen the divide between the rich and the poor.
Risk of Conflict. Your mind probably jumps to President Trump and Kim Jong Un and the threat of nuclear weapons. The World Trade Organization (WTO) worries about this because of worldwide trade partnership agreements. If conflicts are unable to be resolved and appointments to the 7-person WTO appellate body remain unfilled, we could be facing increasing issues with trade. This could hurt not only economically, but geopolitically if relationships are strained as a result (which they inevitably would be.)
Currency Weakness. Along with this, the dollar is exceptionally weak currently. When the dollar is lagging, as compared to other currencies, it diminishes our purchasing power of foreign goods, EX: oil. This then trickles down to the consumer as prices will rise.
Natural Disasters, Weather & Climate. In 2017 when discussing devastating weather events, you would be hard-pressed to find someone who didn't automatically say hurricanes. From Harvey to Irma to Maria, the destruction bill from last seasons storms could near $200B. Temperatures were the hottest on record. Wildfires across the U.S. were 46% above the average.
Air Quality. The WHO estimates 90% of the worlds population live in areas where air quality levels fall below guidelines. Fossil fuels are still mainly to blame, as the world moves towards more renewable energy.
Food Sustainability. The main concern with temperatures is the sustainability of the agriculture system. Heat is not the only concern of killing crops. As we saw last month in Florida, a cold-snap hurt the already debilitated orange crops after the string of hurricanes. Reduced crop diversity and potential water supply issues, could lead to a smuggling of food causing, once again, geopolitical tensions. A solution posed is to implement stress-tests to avoid this happening.
Cyber. In Davos, Marsh & McLennan CEO Dan Glaser discussed the cyber threat as what he deems one of the largest risks we, as a world, will face in the near future. With hacks being ever-prominent, our cyber-defenses will be tested. Cyber breaches by businesses have almost doubled in 5 years. IoT devices now outnumber the global population. There are 8.4 billion devices to 7.6 billion humans. The cost of cyber crimes to businesses over the next 5 years is estimated to be $8T.
Government Internet Regulation. To follow, with cyber attacks increasing, it could lead to government-led Internet break-ups into national or regional divisions.
Trade. Following government regulation is the notion of a move away from globalization (businesses operating on an international, global scale) to more of a protectionist (shielding domestic industries by heavily taxing imports.) Most recently this has been seen with President Trump's move to heighten the tax on solar panels and washing machine parts, both generated in China. This move towards protectionism, experts worry, may roil supply chains and unequally disperse employment between countries. Something that could potentially follow this would be greater income disparity. Although America would profit from this, the long term effects are the worry.
Taxation. With the recent Trump Administration move to push corporate tax rates from 35% to 21%, we believe we will see more competition between countries. A large swath of companies are expected to repatriate to the U.S. with new laws in place pledging less tax penalties.
Geo-Economics. Formerly, the notion of globalism was prevalent in Western countries that benefited from low-cost manufacturing to lift economies. The positive sentiment around this has dwindled. The U.K. and the U.S. notoriously were two countries that held this in the highest of esteem. We now have seen a shift with Brexit and the election of President Trump towards more protectionist views, which seemingly, has benefited both economies.
Prescription Drugs. Resistance to prescription drugs has been an issue in the making for some time now. The cause of antimicrobial resistance (AMR) has been the over and misuse of prescription drugs and the fact no new classes of antibiotics have been invented since the 1980s. With this, concerns have been raised about immunity issues to come. The development pipeline is a key focus for the World Health Organization.
Financial Markets. In 2017 the Dow Jones Industrial Average rose by 25%. The S&P and the Nikkei in Japan by 19% and the German DAX by 11%. History shows stocks have only been higher twice; 1929 and 2000. If your memory serves you correctly, both of those were right before market crashes. However, analysts argue, we are posed to continue the 8-year bull run.
Global Debt. Compared to 2008, global debt-to-GDP is remarkably higher now. Global debt across the G20 (international forum for 20 countries ranging from Australia to France to the U.S.) totaled $125T up from $80T in 2007. Corporate debt has sky-rocketed and is showing some signs of strain. Emerging market debt which was barely there in 2008 has increased sharply. The U.S. is not alone in this. China is another leader in debt. A large discussion in the U.S. is what is an attainable and sustainable GDP. 3% is the current goal.
As you can see, Davos is chock-full of discussions and gives a good feel of sentiment for the year ahead. I will leave you with a few interviews with the CNBC anchors and some of the most influential business people in the world.
Brilliant people, in a beautiful place.
Hope you are as inspired by their insights as I am. Being amongst them is motivation for me each and every day!
Knowledge is power & I leave you with this:
"Look up at the stars, and not down at your feet. Try to make sense of what you see, and wonder about what makes the universe exist. Be curious."- Stephen Hawking
Bloomberg, CNBC, Investopedia, CNBC, CNN, Google Images, Marsh & McLennan Companies
Did you hear? Did you feel it? Yesterday at 12:01 AM the government shutdown. Didn't know? You're not alone. It has been fairly muted since it is the weekend.
Turn on any news channel today and it is the talk of every anchor from Fox to CNN to MSNBC. So what actually IS a government shutdown? Here are some basics:
Why did it happen? On Friday evening, Congress failed to act on a short-term budget. No budget? No paychecks.
It is a bit of a political mess right now, but the main blame is being cast amongst Senate Democrats who refused to pass a bill without forward movement on their DACA agenda.
This is largely being spurred by what many are considering to be inaction on the part of Republicans. Congressional members spent the weekend scurrying around Capitol Hill trying to find a resolution before Monday.
Has it happened before? Yes. 18 times.
Who does it affect? At least 800,000 federal workers. Federal workers are paid by the federal government. Some government workers will be exempt. Workers will arrive Monday morning, as they usually would, to find out if they are subject to furloughs (exempt and will be working.)
Also paid by the government? Our troops. The military members will still be going to work they are just not paid automatically. Once Congress is back in session, they have to vote to pay them for their time worked. Each time this has happened, they have retroactively voted to pay, of course.
Can federal employees still work if they want? No. It is against the law for the government to accept any voluntary work. Even if government workers have a large project, they are prohibited from working. Seem silly? It is.
Are some federal agencies open? Yes. Some that are deemed essential. However, operations are usually quite scaled back.
How could this affect me? The big thing is if this lasts for more than 10 days, it will prevent the processing of tax refunds by the IRS. With this, you will receive those refunds later than usual.
Social security is still paid during a shutdown as it is mandated, not appropriated.
What about the stock market? During the last shutdown in 2013, the S&P 500 actually gained 3.1%. A new factor however, is that we are in the middle of earnings season. On Tuesday, more than 50 companies including Johnson & Johnson, Proctor & Gamble, State Street and Verizon are set to release.
The stock market relies on several federal agencies to function, most notably the Securities and Exchange Commission. From Business Insider, the Commodities Futures Trading Commission has contingency plans furloughing (allowing to work) all employees responsible for managing and stabilizing financial markets.
Isn't there a better way to get things done? One would think. John Dickerson posed this question to Minority Whip Dick Durbin this morning on Face the Nation. At the end of the day, this is taking a stance. The Democrats are tired that in their view, nothing is getting done on DACA.
They are simply holding out to get a resolution they deem acceptable. Choosing to force this into a shutdown situation appears to be dividing Congress and the President even more. "Open the government and we'll open negotiations" was the argument formerly used.
How Is This Different Than When Republicans Were to Blame in 2013? 2013 was the last time the government shutdown and in this case, it was the Republicans voting "nay" on the budget. However, they were voting NO solely on the budget. In 2013, the proposal included a large portion that was set to fund Obamacare. The Republicans, of course, disagreed with this policy and therefore rejected the budget.
Enter the 2018 shutdown. Democrats are actually in agreement with the budget. They are simply voting to not pass it based on an (arguably) unrelated agenda.
Now that I have your attention... This post is not going to focus on my expertise in Bitcoin mainly because it is quite foreign to me. It is fascinating. Intriguing. A seemingly get-rich-quick scheme to nab a G550 one day. The Winklevoss twins are Bitcoin Billionaires...so why not you? On another note...sweet, sweet revenge, Mark Zuckerberg.
Before we delve into the excitement of Bitcoin, I want to run through some more...should we say, traditional ways of investing. These different platforms are tailored towards millennials who may not have large sums of money to invest.
Back "in the day," older generations called their broker to execute an order to buy a stock or bond. Word of which stocks were hot, were found in the newspaper, the workplace and spread by word of mouth. Today, you have the world at your fingertips. Within moments you can Google NYSE or NASDAQ followed by the ticker symbol and have a plethora of information.
Once that information is garnered, you can head to your online broker, deposit money from your bank account and within a day or so, execute a trade and become a new shareholder. So how should you go about this? I discuss in Barneys, Bergdorfs & Bill$ that I use CapitalOne Sharebuilder. It functions like a normal online brokerage but there are now apps dedicated specifically to millennial investing. Let's check a few out...
In this week's edition of Barron's, the article "Scroll, Tap, Trade: Apps That Target Millennials" kicks off this discussion. Here are 3 apps the article discusses:
Acorns. 2.5 million users. 70% are ages 18 to 34. $1/month.
Stash. 1.5 million users. 66% are ages 18 to 34. $1/month. Began as strictly an investing platform and has now grown into retirement accounts with plans to "evolve" with their investors.
Robinhood. 3 million users. 77% under 36. No fees.
Now, as I have stated, I do not use these apps. I began my investing on CapitalOne and have simply kept my portfolio there so I do not have first hand knowledge of using these. From a glance, it appears these all basically do the same thing: make investing quick and simple.
A big misconception with investing is you need to be rich starting out in order to jump in. Not the case. If you're having trouble making your monthly mortgage or car payments, then maybe this isn't the time as you don't want to drive up your debt obligations. However, you by no means have to be flush with cash. Putting in $100 or $200 is a fine way to start. An important thing to note are fees associated with investing. Either a monthly fee or a per trade fee will usually apply. Read the fine print!
Just from a bit of research, Stash looks to have a great "Learn" portion of their site. Their staff and contributors write articles on the principles of investing and other strategies.
So what should you invest in? The stocks millennials overwhelmingly invest in probably wouldn't surprise you: Apple, Tesla and Snap (Snapchat) are a few. Warren Buffet talks about the investment strategy of buy what you use and know. Wear Nike? Buy Nike stock. Now, you will want to go about this with research as well. Just because you really love Under Armour's under shirts doesn't mean you should dive in head first (the company was the worst performer in the S&P 500 in 2017. But, hey, don't underestimate Kevin Plank...maybe it'll bounce back!)
The best and most important thing you can do is, well 1, do NOT invest money you don't have. Everyone has different risk tolerances, but taking out loans to jump into the stock market is generally not the way you way to start out. Also, do not neglect your current obligations. People have risked and struck it big but the ones who end up upside down in their debts outweigh those success stories.
Besides that...RESEARCH. Read the newspaper. Watch CNBC. Subscribe to Barron's. If you are serious about investing and want to use the markets as a way to help fund a strong financial future, it is going to take some work. Unless you are trading day-in and day-out, you should think of your stock market plays as investments, not your income. Your day-to-day job is your income, this is a way to help give you some more cushion for the future. There is little substitution for good old fashioned hard work! Shortcuts have pitfalls.
It is not a sure thing. You've gotta risk it for the biscuit but keep in mind...you could lose it all. There are no guarantees when putting your money in a stock. The money you invest is not guaranteed to you. Putting your money in a bank is guaranteed you'll get it out. Funds are insured by the FDIC. Deposits up to $250,000 are safe by insurance.
When you pick a stock, you're picking a company. You're picking it's culture, it's employees, executives and betting on its longevity. Now, there is a snowballs chance in hell Apple or GE won't be around in 25 years. But a good lesson (and obviously a very rare occurrence) was Enron in 2002. The stock price had soared, being propped up by falsified accounting practices. From 2001 to 2002, the stock price fell to $0 taking their shareholders down with them.
If something sounds too good to be true...it usually is. Bubbles are something to be aware of and leads us back into the topic of the fad of the year, Bitcoin.
A bubble, from Investopedia, "occurs when investors put so much demand on a asset that they drive the price beyond any accurate or rational reflection of its actual worth. In the case of a stock, the actual worth would ideally be determined by the performance of the underlying company. Like the soap bubbles a child likes to blow, investing bubbles often appear as though they will rise forever, but since they are not formed from anything substantial, they eventually pop. And when they do, the money that was invested into them dissipates into the wind."
Now, I am not calling Bitcoin a bubble but there are massive parallel's with the cyrptocurrency to the definition above. From this week's edition of Barron's: "Here's one cyclical, but largely accurate, view of market cycles. Wall Street spots an exciting trend. Financiers fund companies and create financial products to play that trend. They get their pals, high-rollers, and insiders in early. Just as the trend starts to peak, the average Joe gets interested, and Joe's grandma too. Then the market crashes."
If you have observed the rise of Bitcoin, you will know it is just the opposite. Bitcoin was invented in 2009. The now billionaire Winklevoss twins invested in April of 2013 when the cryptocurrency hit a high of $266. It now sits at $17,434 (12/12/2017; 12:01 PM EST.)
Banks have not been at the forefront of this trend. Possibly the greatest example of this was JPMorgan Chase CEO, Jamie Dimon slamming it as a fraud at one of the most prestigious investor conferences of the year, Delivering Alpha.
Banks are now jumping on board to start offering the currency to their institutional investors. The CBOE (Chicago Board of Exchange) Futures Exchange began listing Bitcoin futures yesterday. This is a good sign because it lends legitimacy to the currency.
The price of Bitcoin has been very volatile (moves up and down rapidly.) Bitcoin can fluctuate against fiat currencies because of its perceived value vs. the currency. Fiat currency is currency that a government has declared to be legal tender, but not backed by a physical commodity. The dollar used to be backed by gold (a physical commodity) known as the "Gold Standard". From 1971 on, it is no longer backed by gold, making the U.S. dollar a fiat currency. Fiat money is managed by governments that favor low inflation, high employment, and satisfactory growth through investment in capital resources.
As a country's economy begins to show weakness, investors may move their assets into Bitcoin. When this has happened in the past, investors moved their money into gold. See the similarities?
This is all relevant to Bitcoin's volatility.
Since fiat money is not "backed" by anything, it risks becoming worthless due to "hyperinflation." Hyperinflation basically causes a country's currency to be worthless. How? In countries like Zimbabwe and Venezuela, there has been a significant increase in the money supply but is NOT supported by gross domestic product (GDP) growth. Those two countries are in such disarray that when you receive a paycheck, because of hyperinflation, it might at well be Monopoly money!
It's like making 100 widgets and no one wants to buy...if there is no demand, your supply is worthless.
We are REALLY getting into the weeds here but I think it is important to understand how currencies work. The bottom line, and why proponents argue Bitcoin is far from a bubble is, like gold, there is a finite amount of the coins. 21 million BTC. Just as there is a finite amount of gold. This lends to both Bitcoin and gold's perceived "store of value." Countries can print infinite amounts of paper currency but gold and Bitcoin have a firm amount.
If you were reading this in hopes of tricks to get into Bitcoin and have your own Yacht A one day, I apologize for my lack of assistance!
There have been bullish projections that the cryptocurrency could be worth $1,000,000/BTC by 2020. If it reaches that, there may be lots of people disappointed they didn't jump in, but as of now, I am not a Bitcoin investor.
Mining of coins, cold storage (drives not connected to the Internet,) multiple copies of your Bitcoins stored in safes...all a bit too out of the box for me, but I do enjoy understanding it and I hope this made at least a little sense.
If you have $17k to spare or want to try for a futures contract, go for it! For everyone else, I encourage you to take the step and look into Acorn, Stash, Robinhood, or any other platform that intrigues you to begin forming your portfolio. Go into investing eyes wide open and only invest what you're not afraid to lose.
Investopedia. Stash. Acorn. Robinhood. Barron's. Dow Jones. Google Images.
"I'm just a bill, yes I'm only a bill, and I'm sittin' here on Capitol Hill." You knew history/civics class was going to be a winner when the teacher announced Schoolhouse Rock was on the agenda for the day.
Out of Washington (and the Ole Miss Rebels x New York Giants), there haven't been too many wins recently. A few attempts at healthcare reform fizzled and now the race is on to get some sort of legislation passed before year end. A failure would surely result in the loss of republican seats in Congress come midterm elections.
So what's the breakdown:
We currently have a 2,000 page tax code. Far too long and much too complex.
The first step to passing tax reform is to pass a budget. The Senate's was passed last week and now the House needs to pass the Senate's late this week/early next to get into reconciliation.
What's In It?
It's not entirely set yet, but some main pieces to the legislation are a cut in the corporate tax rate from 27% to 20%, repatriation from profits returning from overseas and the lowering of personal income taxes with an emphasis on helping the middle class.
The idea with cuts to the corporate tax rate, is lower taxes will lift firms profitability spurring reinvestment and will stimulate the overall economy. This in turn pushes up household incomes, spending and then tax revenues, albeit at a lower rate.
It is estimated that a 100 basis point (1%) tax cut will spur spending 50 basis points (.50%) in 5 years.
Looking around the world, the U.S. has one of the highest corporate rates.
It becomes a real Sophie's Choice for companies of whether they are forced to move their operations elsewhere, or be subject to a tax rate that simply isn't competitive with their foreign peers. Of course, you can argue large companies, like Apple, already find their way around these taxes via loopholes.
Britain for example has a 19% corporate tax rate, expected to fall to 17% in the years to come. A 10% margin makes it difficult to compete.
Who's Paying For It?
The trite saying of "there is no such thing as a free lunch" is all the talk amongst Congress, currently.
With all of these tax cuts, how will the lost revenue be made up? Through 401(k)'s? Through the BAT (Border Adjustment Tax)? Neither of those look likely.
Could we possibly be straying away from finding a way to make up for the deficit at all? Maybe. There will be lobbyists fighting in favor of their constituent's. Everyone wants lower taxes but no one wants to pay. Go figure.
It would appear the move, politically anyway, would be to simply let it run up the deficit. This avoids angering the American public as well as lobbying groups. However, our already $20T deficit would grow at a exponential pace should this be the resolution.
What About The Market?
The question on market prices is the wonder if the prospect of tax reform already baked in or if the legislation DOES in fact pass, do stock prices rise even more.
Analysts predict a 1% rate decrease would add $1.50 to EPS (Earnings Per Share.) Another consideration, are rumblings the Federal Reserve will raise interest rates 25 basis points (.25%) in December, which could trigger a flight into fixed income, especially if tax reform doesn't get passed.
A market correction is constantly discussed during this record high market.
Many believed a Trump election would send the country spiraling into a recession. The investors that predicted we would be approaching 24,000 on the Dow, are few and far between.
It seems the market is rising because of the potential of these legislation reforms. That, and we have a president that is no longer vilifying business.
This hasn't been a seamless administration, by any means. There have been tweets, controversies and interparty fights. But a successful passage of tax reform would bode incredibly well for 2018.
Hey, maybe the Giants and the Rebs will finish strong as well.
Forbes is famous for lists. The 400 Wealthiest People, the 2,000 Leading Companies, 30 Under 30. To celebrate Forbes centennial, the magazine has compiled a list of the 100 Greatest Business Minds. Now, greatest is a relative term and everyone defines success and being a tremendous business person in a different way. However, you would be hard pressed to find someone who can say this list is not impressive.
I get great motivation from those who have been abnormally successful. It is fascinating to observe their principles and mindsets to determine what makes them different and what has led them to be on the forefront of business.
In the 100 Greatest Business Minds, everyone on the list speaks to a specific topic. Below are the recipients and a quote from their topic. I hope this provides condensed motivation to you as it does to me.
Sheryl Sandberg. COO of Facebook on empathy. "Employees are better people when we stop trying to be two people and bring our whole selves to work."
Yuri Milner. Investor on challenges. "My father told me if I wanted to learn about business, I had to start looking beyond my horizon."
Hamdi Ulukaya. Founder of Chobani on action. "There's something magical in the movement, in the action...so don't sit around waiting-- act."
Michael Milken. Bond financier on change. "Both issues (of Forbes) really made me think about how financial structure changed over time and how leading companies changed...understanding how change occurs is key."
Craig Venter. Founder of Celera Genomics on experimentation. "Ideas are a dime a dozen. What makes the difference is the execution of the idea."
Bernard Arnault. Founder of LVMH on flexibility. "When you start something today, you usually have to start it all over the world to be successful."
Arthur Blank. Co-founder Home Depot, owner of the Atlanta Falcons on humility. "Too many businesspeople have big egos and aren't willing to ask (for other's opinions.)"
Giorgio Armani. Founder of Armani on ideation. "I always try to maintain a sense of reality and ensure that I surround myself with the right people."
Lee Shau Kee. Real Estate Investor on mentors. "Explore what's best in others and follow."
Oprah Winfrey. Founder of the Oprah Winfrey Network on listening. "'What am I going to talk to Nelson Mandela about?' 'Why don't you try listening?'"
Russell Simmons. Rap mogul on mentors. "If you're present and awake, you become this great thinker, this great worker. You become a fine tuned machine."
Diane Von Furtstenberg. Founder and designer of Diane Von Furstenberg on mentors. "Confidence in what you do is crucial, but that does not mean being delusional. You must always face the truth and combat obstacles as they appear."
Donald Trump. President of the United States and owner of the Trump Organization on mettle. "You have to enjoy coming in to work each day and going to battle for what you believe in."
Jack Dorsey. Founder of Twitter on mistakes. "My biggest mistake was thinking I shouldn't show my mistakes."
Michael Eisner. Former CEO of Disney on mistakes. "Infoseek shouldn't do advertised search because it wasn't the 'Disney way.' That was probably a $200 billion dollar mistake."
Jack Welch. Former CEO of GE on mistakes. "I learned to never kick someone when they're down. Everyone makes mistakes, and some are real whoppers...that makes them whopping opportunities, too."
Patrice Motsepe. Chairman of African Rainbow Materials on motivation. "We ran our business differently...we paid our workers based on profitability, with bonuses and aspirational targets."
Mark Zuckerberg. Co-founder of Facebook on motivation. "It's not enough to have purpose yourself. You have to create a sense of purpose for others."
Meg Whitman. CEO of Hewlett Packard on nobility. "As we advance in our career, there is this belief that winning at all costs is winning nonetheless. I never bought into that myth. I respect ambition, but not ruthless ambition."
Tim Berners-Lee. Inventor of the World Wide Web on openness. "The open Web, like all markets, demands rules to ensure it stays fair and competitive."
Jerry Jones. Oil tycoon and owner of the Dallas Cowboys on operating lean. "You can do a lot of things with fewer people if you are willing to take a lot of risk."
Shahid Khan. Owner of Flex-N-Gate and the Jacksonville Jaguars on opportunity. "I realized this was the land of opportunity and I could control my own fate...I had discovered the American Dream."
Paul McCartney. Member of the Beatles on ownership. "Own your work."
Henry Kravis. Cofounder of KKR on partners. "If you have the same values and are focused on the same goals, which is to build a firm that will be here long after we have retired, you can go a long way."
Jeffrey Skoll. President and pioneer of eBay on problem solving. "Having clean, inexpensive, sufficient energy that's not controlled in some government's hands or some big business' hands helps solve a couple of the giant threats coming down the pike."
James Patterson. Businessman and American Author on productivity. "Don't take 'no' when your gut tells you 'yes.'"
Li Ka-Shing. Chairman CK Hutchison and Cheun Kong Property on prudence. "I am a strong believer in advancing with cautious deliberation."
Robert Smith. Founder of Vista Equity Partners on purpose. "Whatever drives us, we all derive happiness from finding purpose. At this age of intellectual capital, where brainpower is the most valued currency, the opportunity to find purpose has never been greater."
Louis Gerstner, Jr. Former Chairman and CEO of IBM on quickness. "When the decision is finally made, I've found my reaction is always the same: I should have done this a long time ago!"
Sheldon Adelson. Founder of Las Vegas Sands Corporation and reimagining. "You don't always have to be the guy that comes up with a new idea from scratch. If you take an old concept and put a spin on it, success will follow you like a shadow."
Jack Bogle. Founder of Vanguard on reinvention. "When a door closes, if you look long enough and hard enough, if you're strong enough, you'll find a window that opens."
John Doerr. Venture Capitalist on relevance. "Here's how I stay relevant: I read. I listen. I try to surround myself with smart people of all ages and backgrounds."
Jeff Koons. Artist on relevance. "People assume they are most creative at a certain age. But if you look at truly great artists, they always get better."
Bernard Marcus. Co-founder of Home Depot on relevance. "Age is just a number. By the end of the day, I've learned something that shows how dumb I was yesterday."
Ratan Tata. Chairman of Tata Motors on relevance. "Be passionate in areas relevant to you. I have tried not to express a view on matter which I am not fully involved."
Vinod Khosla. Co-founder of Sun Microsystems on reputation. "I explicitly don't build or guard my reputation. I believe in telling it like it is and not worrying about it."
Jacqueline Novogratz. Founder of Acumen Fund on reputation. "Don't worry about reputation but about character. When you are known for that, you don't have to worry about guarding your reputation-- others will do it for you."
Miuccia Prada. Co-CEO of Prada on reputation. "You have to challenge yourself to think every day to understand and react to what is happening."
Carlos Slim Helu. Investor on reputation. "At the end we leave with nothing. So do the right thing by your customers, your employees, your backers."
David Geffen. Founder of Asylum Records and co-founder of DreamWorks on responsibility. "I learned never to do anything you're not passionate about."
Sandy Weill. Former CEO of Citigroup on retiring smart. "I stress the importance of having another life outside business."
Bill Gates. Cofounder of Microsoft on revolution. "The potential for these advances is thrilling-- they could save and improve the lives of millions-- but they're not inevitable."
Richard Brandson. Founder of the Virgin Group on risk. "We sometimes fall flat on our face. But people don't mind people who try things and fail."
Stephen Schwarzman. Co-founder of Blackstone on risk management. "Nobody's job was to say, 'I think it's wonderful.'"
Michael Bloomberg. Founder of Bloomberg on risk/reward. "The biggest management failures in both business and government are not missed targets but missed opportunities."
Barry Diller. Founder of IAC on self-destiny. "Don't think of a specific job, so to speak, or a specific career, like 'I'd like to be this' or 'I'd like to be that.'"
Steve Wynn. Founder of Wynn Resorts on self-esteem. "You need to have a culture instead of a payroll."
Muhammad Yunus. Founder of Grameen Bank and Winner of the Nobel Peace Prize on selflessness. "Capitalism has been interpreted to be based on greed. But while humans are selfish, they're also selfless."
Ronald Perelman. Investor on speed. "The world is changing so fast that you cannot bask in any sort of passivity, because it doesn't exist anymore."
Terry Gou. Founder of Foxconn on stages. "The first 20 years of my career, I worked hard to make money...the second 20 years of my career, I worked for my ideals...in the next 20 years, I will work for issues that are my passion."
Shonda Rhimes. Producer on storytelling. "Storytelling remains basic: it's just a campfire, the human connection that says you're not alone."
John Paul Dejoria. Co-founder of John Paul Mitchell Systems and Patron on the golden rule. "Treat and pay your staff exactly the way you'd want to be treated if you were in their place."
Jeff Bezos. Founder of Amazon on transparency. "Rather than inferior products shouting louder, we have sort of a product meritocracy."
Berry Gordy, Jr. Founder of Motown Records on unity. "If you do the right thing, the right thing will come to you."
Eli Broad. Founder of KB Home and Sunamerica on unreasonableness. "The reasonable man adapts himself to the world, the unreasonable doesn't; therefore all progress comes from unreasonable people."
Rupert Murdoch. Chairman of News Corp on urgency. "The urgency, daily drive, that constant selff-questioning integral in editing a paper, the ceaseless curiosity are what I have stood for every day in my career."
Jim Collins. Author on usefulness. "'You spend a lot of energy on the question of how to be successful. But that is the wrong question! The question, is how to be useful.'"
Charles Koch. CEO of Koch Industries on values. "When hiring, if forced to choose between virtue and talent, choose virtue. Talented people with bad values do far more damage than virtuous people with lesser talents."
Charles Schwab. Founder of Charles Schwab on values. "our success has covered our mistakes, and we had begun to lose our compass."
Tadashi Yanai. Founder of Fast Retailing on values. "I try to practice what is known as Shin Zen Bi, which translates to Truth, Goodness, Beauty."
Ted Turner. Television network founder on wisdom. "We couldn't have been a more unlikely pair-- a privileged white kid and a grown black man. I don't think I would be the person I am today if it weren't for him."
Dhanin Chearavanont. Senior Chairman of CP Group on youth. "Successful people are both innovators and disruptors."
Brian Chesky. Co-founder of Airbnb on zig-zagging. "I think you must always live and think like a child. Or have that childlike curiosity and wonder."
Sam Zell. Founder of Equity International on zig-zagging. "There are many times in my life when I would have liked to follow the herd. Instead, I have always followed my gut-- and sometimes it's been really lonely...Conventional wisdom always leads to mediocrity."
Bono. Lead singer of U2 on advocacy. "Capitalism is not immoral, but it is amoral. And it requires our instruction."
Marc Benioff. Founder of Salesforce on artificial intelligence. "That idea of the beginner's mind is the core to innovation."
Michael Dell. Founder of Dell Technologies on artificial intelligence. "The Computer Age is just beginning...Companies will succeed and fail based on their ability to translate data."
Masayoshi Son. Founder of Softbank on artificial intelligence. "Every morning I wake up and ask, where am I? I don't know where I am because I am jumping around the world, but I don't want to go to sleep. It's thrilling."
Martha Stewart. Founder of Martha Stewart brands on authenticity. "There is no room for sloppiness, inaccuracy or omission when you're trying to build a relationship with a customer base."
Charoen Sirivadhanabhakdi. Founder of Thai Beverage on balance. "Health is your own; money belongs to others; power is temporary; and reputation is eternal."
Howard Schultz. Chairman of Starbucks on benefits. "I'm still trying to build the company my father never has a chance to work for...he had no loyalty to any employer because they showed no loyalty to him."
T. Boone Pickens. Oil tycoon and hedge fund manager on bullishness. "When you're in the oil business like I've been my whole life, you drill your fair share of dry holes, but you never lose your optimism. Be the eternal optimist to see what the next decade will bring."
Steve Case. Co-founder of AOL on cities. "When Detroit was an automobile powerhouse and Pittsburgh was the steel city, Silicon Valley was just fruit orchards."
Daniel Gilbert. Founder of Quicken Loans and owner of the Cleveland Cavaliers on civic mindedness. "I have never seen anybody create a whole lot of wealth by chasing money."
Leonardo del Vecchio. Founder of Luxottica on clarity. "I prefer to match words with deeds or let the facts speak for me."
Eric Schmidt. Former CEO of Novell and Google on coaching. "I was far along in my career; I didn't need a coach. I could be a coach. Of course, I was wrong about that. I actually needed the coach."
Ray Dalio. Founder of Bridgewater Associates on collectivity. "The computer thinks parallel to me. I can make much better decisions than I could make alone."
Martine Rothblatt. Founder of Sirius and United Therapeutics on connectivity. "Anything worthwhile in life requires teamwork, and you cannot manage what you don't understand."
Carl Icahn. Founder of Icahn Enterprises on contrarianism. "Sometimes the best way to make money is when most people say you are wrong and nuts."
Les Wexner. CEO of L Brands on curiosity. "Here I had come for wisdom, and he just tells me to be curious."
Sean Combs. Rap Mogul on customer service. "I began my business career at 12 delivering papers. I had a lot of elderly customers, so I would always put the newspaper in between the screen door and the door-- that caring made me different, made me better."
Billy Beane. Vice President of the Oakland A's on data. "Every business is a living documentation, an algorithm that needs to be improved."
Frank Gehry. Architect on details. "No matter how small a project you work on, put your heart and soul and sense of responsibility into it."
Sara Blakely. Founder of Spanx on due diligence. "Early stage entrepreneurs shouldn't forget about that layer (of due diligence.)"
Lakshmi Mittal. CEO of Arcelormittal on flexibility. "Every industry today has to fight complacency."
Julian Robertson, Jr. Founder of Tiger Management on flexibility. "If I were starting out now, I would look at what the competition is like in various fields-- and then consider some that aren't so popular."
Elon Musk. Co-founder of Tesla, SpaceX, PayPal on foresight. "With AI we may be summoning the demon and could create an existential risk to humanity. Can we get ahead of it?"
Fred Smith. Founder of FedEx on gambles. "Sometimes it pays to be a little crazy early in your career."
David Rubenstein. Co-founder of the Carlyle Group on happiness. "Personal happiness came about much more from giving away my money than from earning it."
Paul Allen. Co-founder of Microsoft and owner of the Seattle Seahawks on health care. "In maybe 20 or 30 years, we will use things like stem cells to change disease."
Morris Chang. Founder of Taiwan Semiconductor on honesty. "Integrity means honesty and willingness to fulfill a promise, even at a high cost."
Bill Marriott, Jr. Chairman of Marriott International on humanity. "The four most important words in business are 'what do you think?'"
Philip Anschutz. Drilling tycoon on industry shifts. "Get in the habit of being curious and developing a willingness to accept the concept of risk."
H. Ross Perot, Jr. Founder of Perot Systems on jumping. "'The mass of men lead lives of quiet desperation.' That wasn't for me."
Larry Gagosian. Art Dealer on keeping 'em honest. "'I don't want them to think that money comes that easily.'"
Neil Shen. Venture Capitalist on learning. "I do not think we will be replaced by AI. This business oftentimes is more like art than science."
Sean Parker. Co-founder of Napster on innovation. "Inventing the future starts with intellectual curiosity-- along with a healthy dose of skepticism."
Guy Laliberte. Co-founder of Cirque Du Soleil on intuition. "I lived in the streets for almost 10 years...you have a fraction of a second to evaluate, when you first meet somebody, whether they might stab you or become your friend."
Warren Buffet. CEO of Berkshire Hathaway on investing. "When I was 7 or 8 years old, I was lucky that I found a subject that really interested me-- investing. I read every book on that topic in the Omaha Public Library by the time I was 11."
Peter Lynch. Portfolio Manager at Magellan Fund on investing. "Selling your winners and holding your losers is like cutting flowers and watering the weeds."
I reference my dad's quotes quite a bit even though when I was younger I told him a fair share of times, "dad, you just don't get it!" To which he replied, "which part don't I get, Sydney? The part that I'm 30 years older than you?" You can imagine how that conversation went... But a wonderful Mark original is the notion of "the money you save is your own." A dollar is too difficult to earn to frivolously throw away on things you don't need.
Today, October 12th, CapitalOne has coined as National Savings Day. These "holidays" for everything are getting a little old, but nonetheless, it brings to the forefront a very important topic that many of us don't think about until we are faced with a large expense.
A study by Bankrate showed that 6 in 10 Americans don't have $500 in savings. For a $500 surprise doctor bill, 20% said they would put on a credit card in which they would carry the debt to the next month or whenever they could pay. Those pennies you put away in a jar on your kitchen counter are only going to get you so far. So what are some ways to save? USAToday wrote a piece in which I laughed at one of their suggestions to join class actions lawsuits. Now, not that you want to leave money you are entitled to on the table, but let's look at some different, more intentional options to help you be better covered down the road.
Automatic Transfers. A simple way to save is to set up a weekly, bi-weekly or monthly automatic withdrawal system tied to your bank account. This takes the issue of remembering to save out of the equation. If you have $250 withdrawn from your checking account and put into your savings, over time this will add up. Should you have an emergency arise, you're not only relying on your readily accessible checking account.
Bonuses. There are a few way to think about bonuses or if you're eligible for overtime. A lot of times when people get a bonus, their automatic instinct is to go out and blow the money to reward themselves for their hard work. Now, all for a good celebration, but this is also the perfect time to save that dough. Realistically, your monthly expenses have been covered by your salary. An extra bonus or working overtime is simply extra cash in your pocket you probably have been just fine without. So instead of blowing (ALL) of it, maybe spend a little, and then use the rest to pay down debts such as student loans or place that money in a savings account.
Food. Being a savvy shopper at the grocery store can help you curb your monthly expenses so you'll have more leftover that you can ultimately put into savings. Have a plan before you go to the grocery. Think about the week ahead, how often will you be eating at home, what food will you ACTUALLY eat and how much of it. The worst thing is getting to the end of a week and having food that has gone bad and you have to throw away. It is wasteful and the equivalent of throwing money down the drain. Also, buy the generic brand. 9 times out of 10, there is no difference besides the price.
Dining Out. Along the same lines and not to ruin every fun thing in life in the name of saving money, but it is no secret eating out is hard on your waistline and your wallet. Hanging out with friends? Make that your night to dine out because sometimes making full meals at home can end up costing more once you add up all the ingredients.
Travel. Flights, hotels, car rentals...trips are expensive. If you have a big trip coming up, plan ahead of time in order to try and save some money. Sites like Priceline guarantee the best rate for flights because of their ability to mix and match carriers. With Priceline you may have one leg on Delta and another on American. Booking direct on United, the price may be more. Weigh your options and see what makes sense. Same with hotels. Priceline has a Name Your Own Price tool. Do some research on how to use it and see how much you can save. Sites like GiltCity have sales on destinations all over the world (usually ritzier vacation spots but still fun to check them out!)
Shopping. Arguably the largest part of "things you don't need." Retailers generally mark up items about 50% to give them their margin. Try to buy things on sale. It makes you feel better to walk out of a store knowing you saved a little bit of money. Check out the sale rack for something you saw a few months back but curbed the desire to buy...I bet it might still be there. Also, when shopping remember LeighAnne Tuohy's quote from the Blindeside "if you don't love it in the store, you won't wear it. That's where you love it most." It also makes a closet clean-out less painful when you can throw worn items rather than ones hanging with the tags.
Find a Side Gig! Even SpiderMan has one! Instead of spending your weekends blowing money, if you have the time, try and find a way to make some money. It can be anything from freelance writing to babysitting to dog walking. Check out websites, ask around at work, gyms and around your community if there is anything you can get involved with. Not finding anything? Start something on your own!
The main thing to saving money is simple...stop SPENDING so much money! Bills and debts are inevitable but curbing your shopping and late night Amazon orders can put loads back in your pocket to provide for something better down the road. Not only will this declutter your home, it will declutter your life and provide you a more stable financial future.
"No one knew healthcare could be so complicated." Going to have to say that one is false. I think American's would be hard-pressed to find something MORE confusing than our healthcare system. Kudos to our new administration for trying to tackle the 800-pound gorilla first, but looking back, maybe something less complex would have been the better move. I don't know, something simple like tax reform...
Young adults can probably relate to the processes of becoming an adult as a kind of "baptism by fire." From filing your taxes, to applying for jobs, to managing a full-time job rather than 12 hours of college classes a week, there are lots of firsts in this new time in our lives and many don't come with a manual.
The inspiration for this post is because I had one of these adulting moments arise yesterday. I returned home to get my mail and had an "Explanation of Benefits" from my healthcare provider, Anthem Blue Cross Blue Shield. With insurance, an annual physical is included with the premiums you pay as it is dubbed a routine yearly screening. For women, we also get other tests that are also covered annually.
I did my physical in early July at a doctor I found on ZocDoc in NYC. I knew to ask if everything was going to be covered under this annual comped physical...their answer was yes. They also ran blood tests to test for a variety of things. SO, all should have gone well, right? A $400 physical bill and $2,000 from blood tests...I would have to say no.
So here are the unknown missteps of my experience to hopefully help someone in the future not end up with a massive bill.
First of all is the basic task of deciding what you want to be responsible for paying AKA your deductible. The amount you pay monthly is your premium. This is the cost for having insurance whether you use it or not. When deciding your benefits (dental, eye, etc.) the higher your deductible, the lower your premiums. Your deductible is the amount you pay before your insurance kicks in. If you are fairly healthy and can absorb some doctors visits, choosing a high deductible will usually save you money in the end in terms of premiums.
Then comes co-pays. This is the amount you pay for going to see certain doctors (certain health plans don't have co-pay's.) Once again, if you're a hypochondriac and are at the doctor frequently, you would want to ensure you're paying extra in premium for a plan with no co-pay's to avoid a $50 fee every time you go to the doctor. For a general doctor visit, the cost is fairly low, maybe $25. When you go to specialists, eye, ear, nose & throat etc. the cost goes up. For urgent care and emergency rooms with our friends from Grey's, the cost for the co-pay is high but it is nothing like the bill that will come in the mail later.
I explain all of this because I have both high deductible's and co-pays, hence why I was responsible for so much of this bill rather than my insurance stepping in.
Questions TO ask. These are the absolute basics but I will leave you with what to ask for to ensure you are not stuck with a $2,000 bill also. When booking a new doctor, first of all make sure they accept your insurance carrier (Blue Cross Blue Shield, for instance.)
If you are going in for things like an annual physical and they want to run tests, first ask if all of these are covered under the yearly physical you are granted with your insurance plan. I would also get it in writing. They ran crazy tests on me like an EKG which is completely excessive, hence the charges.
If they are going to run blood tests, again, ask if they are covered. SECOND, doctors offices usually send this "lab work" out to a 3rd party. Although you may have checked that the doctor is "in-network" (takes your insurance) the lab might not be (as what happened with me.)
^Real photo of me when trying to figure all of this out.
If this happens to you, know there IS room for negotiation usually. I got on the phone with Anthem and had them dispute the charges and ultimately ended up getting the labs covered at an "in-network" cost. This will only happen if you're actively paying attention to your bills and taking the time to make the call.
Coming out of college, I had a nonexistent credit score. Which I, of course, am incredibly thankful for.
Not having to make regular student or car loans led me to have no credibility when it came to my ability to pay off a credit card.
I had a debit card linked to my bank account but knew it was time to get my credit going. So I applied...for 3 cards...because I kept getting denied.
I was probably quite lofty in my card expectations as I was applying for pretty high-flying cards with lots of perks...but the truth was, I could barely get a minimal card. I ended up with an American Express through our bank. American Express is great for their rewards. The card sufficed my needs but after having it for a year and consistently paying my bill on the exact day payment came due, I have established a good credit score and determined it was time to move on and, as Beyonce says, Upgrade U *to a new card.*
But how to choose? I am breaking down a few different cards to hopefully help streamline someone's hunt for the perfect card!
To begin, let's start with the basics of credit cards and what sets them apart.
Bear in mind your credit score. You can check this for free on the FICO credit site. The more perks the card offers, the higher your credit score generally needs to be in order to obtain the card. Also keep in mind, applying for lots of cards WILL hurt your credit score.
Capital One Quicksilver Cash Rewards
Rewards: 1.5% cash back
Annual Fee: $39
Minimum Credit: limited history
Capital One Secured MasterCard
-A secured card hedges your willpower. If you are worried you will overspend, hence destroying your credit score for years to come, stick with a secured card. Much like a debit card, you can only spend the amount you put up in collateral.
Annual Fee: $0
Minimum Credit: no/low credit
American Express Cash Back
Rewards: 1-3% cash back (based on the purchase)
APR: 13.99%-24.99% (based on credit score)
Annual Fee: $0
Minimum Credit: Good (700-750)
Citi Double Cash
Rewards: earn cash back twice, 1% on purchases, 1% when you pay for purchases
Annual Fee: $0
Minimum Credit: Good (700-750)
Points, Points, Points
American Express Gold Card
Rewards: 25,000 bonus points, 2-3x points/$1
Annual Fee: $0 first year, $195 after
Minimum Credit: Good (700-750)
Chase Sapphire Preferred Chase Sapphire Reserve
Rewards: 50,000 bonus points & 1-2 points/$1 Rewards: 50,000 bonus points & 3x points/$1
APR: 16.99%-23.99% APR: 16.99%-23.99%
Annual Fee: $0 first year, $95 after Annual Fee: $450
Minimum Credit: Excellent (750-800) Minimum Credit: Excellent
Why is the Reserve so expensive? Elite travel benefits and credits, higher point rewards for spending, unparalleled 24/7 customer service (a REAL human!)
You can get a credit card for specific airlines: Delta, United etc. but with the Sapphire cards, the rewards are flexible, meaning you can redeem the points on different airlines not just one.
American Express Centurion Black Card
Rewards: numerous ranging from points, to VIP airport treatment, upgrades at hotels etc.
Annual Fee: $7,500 initiation, $2,500 annual (invitation only, .1%)
Annual Spending Requirement: $250,000
Minimum Credit: Excellent. Line of credit with LOTS of 0's required.
Like mother, like daughter ;)