Fidelity Credit Card

Fidelity Credit Card Review

The fidelity credit card has a lot of great perks. The Fidelity Rewards Visa Signature Card gives you 2% cash back on all purchases.  In additional, they have a promotional offer where if you spend $500 in eligible net purchases within 90 days of opening the account you’ll earn $100 cash back.  During the first 12 months you’ll receive an introductory APR of 0%.  After the 12 month promotion your rate will increase to 15.49% APR for purchases & balance transfers, while cash advances will be at 25.49%.

Pros & Cons of The Fidelity Credit Card


  • $100 bonus cash for signing up
  • 0% APR for the first 12 months
  • 2% cash back on all qualifying purchase
  • No annual fee
  • You can easily transfer your cash back into a savings account, checking account, and most fidelity manage accounts (Traditional IRA, Roth IRA, Rollover IRA, SEP IRA, and 529 College Savings Plans).

Things To Consider:

  •  25.49% APR on cash advances (introductory rate doesn’t apply)

Final Thoughts on The Fidelity Rewards Visa Signature Card

Fidelity has one of the better rewards programs that’ll you find out there.  For those who have trouble savings, this card makes it super easy to transfer your earned cash back into a savings/investment account.  If you don’t plan to take cash advances out, than I would recommend this card to you.


Using 401k For Down Payment On House

Using 401k For Down Payment – Is It Right For You?

After adding money to your 401k plan over several years, you may have built up a lot of money inside your 401k accounts. These accounts could be a desirable supply of funds for investing in a home. Nevertheless, there tend to be rules as well as restrictions upon withdrawals from the 401k accounts. Fortunately, there may be a way for you to make use of the money within your 401k plan. One great way is using 401k for down payment.

Some 401k programs allow participants to consider a loan from the funds inside the 401k. Usually, the 401k plan will limit the quantity of the loan to some certain percentage from the total balance. This implies that you cannot borrow all the money inside your plan, are just some of it. Nevertheless, this quantity may be significant enough to become useful for the long-term objectives.  Check out our 401k calculator to see the impact loans can have on future earnings.

Borrowing From 401k Plan

Using 401k For Down Payment Fidelity

Here’s a screenshot showing what loans you have available through your 401k plan if you’re using Fidelity.

When a person borrow money from the 401k plan, you borrow the cash from yourself. In additional words, the money is withdrawn out of your account as well as distributed for you.  That means there isn’t a credit check as well as your credit score doesn’t impact in your loan rate of interest.  This is because, there isn’t any risk in order to any lender.  You are repaying yourself. Actually, the curiosity you pay about the loan goes straight into your personal 401k accounts.  It does not go into any financial institution or loan provider.

Be Aware Of The Rules When Using 401k For Down Payment

However, it doesn’t mean you are able to control how so when you pay back the mortgage. The INTERNAL REVENUE SERVICE has requirements that must definitely be met concerning 401k financial loans. As this kind of, the plan may have a set rate of interest that you need to pay whenever you repay the actual loan. Additionally, you should make well-timed, regular obligations, just like every other loan. Usually, most 401k programs require that you simply make regular monthly obligations to be able to fulfill this particular requirement.

When using 401k for down payment you need to be aware of possible negative situations that may arise.  It is necessary that a person make your own 401k program loan obligations. While you will find no lenders involved, and therefore there isn’t any damage for your credit score or credit history, there could be substantial taxes repercussions with regard to failing to settle the mortgage as decided. Any mortgage principal that isn’t repaid is recognized as a distribution through the IRS. Which means that the entire amount associated with any delinquent loan stability is taxable because ordinary earnings. Even worse, if you’re under grow older 59 1/2, then your distribution is going to be considered an earlier distribution and could be susceptible to a 10 % tax fee.

“Using 401k For Down Payment Does Have Its Advantages!”

I would advice against using 401k for down payment, if you already have the cash sitting around.  Otherwise, the advantages of using 401k for down payment to purchase a house are extremely advantageous to many people. Nevertheless, it is essential to realize that though it is financing to yourself, it continues to be an actual loan, also it must end up being repaid. If you’re able to do do that, then borrowing using 401k for down payment can be a smart method to finance your house purchase.

How to Fight Inflation

How To Combat Inflation? – 5 Strategies To Fight Inflation

Inflation – Rising Prices – Can Make It Difficult To Get Ahead

Inflation occurs when prices are steadily and noticeably on the rise.  Out of control inflation can wreak havoc on an economy, and for individuals even moderate inflation can make it challenging to get ahead.  The purpose of this article is to provide some concrete, practical strategies regular people can use to combat the effects of inflation.

How Inflation Affects Regular People

One of the positives of inflation is that wages generally rise.  Isn’t that great!  If only the story stopped there it would be.  The problem is that inflation causes costs rise as well.  For example, if you rent then each time your lease is up then your rent will noticeably increase, thus eroding the effects of your higher wages.  It’s not just rent.  Inflation causes the price for gas, groceries, electricity, mobile phone usage, movie tickets, clothing, and all kinds of things regular people need and want to rise as well, making it a struggle for regular people to keep their heads above water.

How To Combat Inflation? – Lock In Your Costs!

What if your income is $100 and your expenses are also $100.  Now, if your wages increase to $110 due to inflation but your expenses also go up to $110 then you would just be treading water financially.  However, if your wages went up to $110 but your expenses stayed at $100 THEN you would be getting somewhere.  One of the keys on how to fight inflation is to lock in your expenses.  But how can regular people do that?  Here are some strategies on how to combat inflation.

How To Combat Inflation Fixed RateStrategy #1 – Buy A Home With A Fixed Rate Mortgage

Housing is most people’s most significant monthly expense, so it follows that if you can lock in your housing costs then you really put a stake in the ground when we answer the question of how to combat inflation.  How does a regular person do that?  By buying a home with a fixed-rate mortgage.  Doing so locks in your housing costs, and as inflation increases then your purchasing power can actually increase as well (because your wages should continue to rise, yet your housing costs should remain the same).

Strategy #2 – Refinance Your Variable-rate Mortgage To A Fixed-rate Mortgage

As I stated above, on how to combat inflation, it’s not enough to just to own a home, you need to either own it outright (congratulations if you do!) or you need to refinance to a fixed-rate mortgage.  Why?  Because interest rates tend to rise with inflation, and if every time you get a raise your mortgage resets to a higher amount due to an increase in interest rates then you’ll always struggle to get ahead of the inflation curve.

Strategy #3 – Buy Your Cars Rather Than Lease

Cars are often regular people’s second most expensive monthly cost.  So if inflation strikes then you may have a decent car lease today, but when it comes time to renew then the cost to do so will be significantly higher.  On the other hand, if you buy your car then you lock in the cost, and the more years you drive it the more effectively you’ll battle inflation. Read more: Leasing vs buying a car pros & cons.

Strategy #4 – Have Some Of Your Financial Reserves In A Money Market Account

The stock market struggles to do well during periods of inflation because borrowing costs are high for businesses (due to high interest rates).  Bonds do even worse, because as interest rates  increase they take a hit in value.  So what can you use for a financial reserve?  A money market account is a good option because the interest it earns will rise with inflation, and money market accounts also have the advantages of being liquid and relatively safe.  If you want even more safety (at the cost of a lower interest rate) then put your money in an FDIC-backed savings account instead.

Strategy #5 – Avoid Variable-rate (Or Floating) Consumer Debt To The Extent Possible

Again, when inflation rises it takes interest rates along with it.  So if you have a substantial amount of consumer debt then it increases your exposure to the negative effects of inflation.  Credit card debt is one obvious example.  However, a less obvious example is a home equity line of credit with a variable interest rate.  If you’re caught with a high balance (through financing major home improvements or college tuition, for example) then try and lock in your rate if at all possible (check out borrowing against your 401k plan as an alternative).

An Inflationary Economy Unmasks Poor Financial Choices

The strategies above generally work well during most economic cycles, so what’s the big deal?  It’s important to keep in mind that a good (or even a stable) economy can mask less than ideal choices.  For example, if you got a variable-rate mortgage while interest rates are flat or declining you would notice little or no difference between your situation and someone who had a fixed rate.  On the other hand if inflation took off then it would take your monthly mortgage payment with it, and that could cause you to feel a strain on your finances in a very real way.

In summary, inflation has serious and far-ranging effects on both individuals and the broader economy.  While the strategies above may at first blush seem general and applicable to most any economy, they are particular well suited to deal with an inflationary environment.  Thus by taking steps on how to fight inflation you can not only weather it well, but you make it work for you.

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Debit Card Budgeting Methods

Budgeting Methods Using Debit Cards

Introduction Of Budgeting Methods Using Debit Cards

Check and debit card budgeting methods are refinements of the Budgeting Cash Envelope System.  When I say “refinements” in this case, I don’t mean that a cash based budgeting system cannot work or be an effective budgeting method for some people, because it absolutely can.  However, cash based budgeting systems do have some notable shortcomings which I discuss in more detail below, and the use of checks and/or a debit card is intended to shore up those weaknesses while still maintaining the integrity of the budget process.  As a means to illustrate how checking and debit card budgeting methods work, assume that your financial situation for the month is as follows.

What this illustration shows is that after you pay all of your bills, you have $1,000 left to cover your day-to-day living expenses for the month.  It’s important to clarify before going any further that there are distinct advantages and disadvantages of making payments with checks, debit cards, and cash, and to learn about that in more detail you can see the article, “Comparing Paying with Cash, Checks and Debit Cards.”  However, for purposes of this budget-related article, I am going to treat the use of checks and debit cards as essentially the same, because both payment methods draw funds directly from your checking account each time you make a purchase.

The Advantages Of A Debit Card Vs. Cash Based Budgeting Methods

Budgeting Methods Card Security

There are distinct advantages to managing your budget with checks and/or a debit card as opposed to cash.

  1. Convenience and flexibility – If all you have is cash and you’re out and about then you’re your spending is limited to the money you have in your purse or wallet.  However, if you’ve got a debit card or a checkbook then you have immediate access to all of the money in your budget (which is $1,000 in our example).
  2. Security – If your checkbook or debit card is lost or stolen there are steps you can take to limit your risk of loss, but if cash is lost or stolen then it’s likely gone forever.
  3. Better record keeping – When you make purchases with cash you only have your receipt from the transaction, and in some cases you may have no receipt at all (paying a babysitter, for example).  On the other hand, when you pay with a check or debit card you not only have the receipt from the transaction, but you have other records as well (entries on your bank statement or, in the case of checks, check carbons).

The Disadvantages Of A Debit Card Vs. Cash Based Budgeting Methods

While there are certainly advantages to managing your budget with checks and/or a debit card, there are drawbacks as well.

Budgeting Methods Debit Card Vs Cash

1. Discipline – While I don’t pretend to know all of the psychological reasons why, people tend to take spending cash more seriously than writing checks or handing over a debit card.  Somehow spending cash “hurts” more, or makes the cost of a transaction more “real.”  As a result, some people have an easier time respecting and staying within their budget using a cash based budgeting method as opposed to a check/debit card based budgeting methods.

2. Math Errors – If you make a math error in tracking your budget while using a checking or debit card money budgeting method there is a real possibility you could overspend, thinking you have more money in your account than you actually do.  With a cash based system it’s unlikely you’ll go long thinking you have more money than you do.  For example, you might think you have $100 of cash left, but if you open your purse or wallet and you only have $60 then that’s it – you’ve only got $60.  Granted you may not be able to remember where the missing $40 went (which can be frustrating), but after counting the money in your hands there will be no doubt how much you have to work (which can provide a sense of certainty).

“Remember Time Is Money.  Simplifying Your Budget Will Give You A Better Chance Of Sticking With It!”

Debit Card Budgeting Methods Receipts

3. Losing Receipts – When using debit cards in particular, it’s not difficult at all to lose track of a receipt, and thus forget to account for it in your budget.  For example, if you get gas with a debit card and fail to take the receipt then it’s very likely you’ll forget to deduct the purchase from your budget.  As with math errors, if you miss recording a transaction such as this then you’ll think you have more money to spend than you actually do, which will put you in danger of blowing your budget.

4. More Complex Record-Keeping – While it’s true that using checks and debit cards technically provides you with better record-keeping, it also makes your record-keeping more complex.  Think about it, if you convert the remaining $1,000 in your account for day-to-day living expenses into cash then you will have very few transactions to account for on your bank statement when you balance your checkbook.  On the other hand, each check and debit card transaction will hit your bank statement, and all of those transactions can be difficult to reconcile unless you’re diligent and organized.

Combining The Debit Card and Cash Based Budgeting Methods

It’s important to note that the check/debit card method of budgeting and the use of cash basis budgeting are not mutually exclusive.  In fact, you can combine the two methods in a myriad of ways, and doing so can provide you with a lot of flexibility and can be tremendously effective.  To illustrate, in our example you have $1,000 to manage your day-to-day expenses for the month.  That being the case, you might elect to take $100 in cash to spend on miscellaneous things over the course of the month, leaving $900 in your account to cover checking and debit card transactions.  Thus, as you go through the month, you have the flexibility to pay for things with a check, debit card, or cash as you see fit.  Again, that’s just an example.

There are almost limitless ways you can combine checking and debit card based budgeting with cash based budgeting to manage your finances.  The important thing is to develop a system that meets your needs, that you’re comfortable with, and that best enables you to live within your means.

Related article “Cash Budgeting Method Explained

Budgeting Cash Envelope System Done Right

The Budgeting Cash Envelope System

How The Budgeting Cash Envelope System Works

The budgeting cash envelope budgeting system is a refinement of the All Cash Budgeting Method.  In other words, instead of paying for everything with cash, the basic philosophy of the budgeting cash envelope system is pay bills using a checking account, but to use cash to pay for everything else.  Here is an illustration of how it works.

What this illustration shows is that you used checks to pay all of your bills, and then you converted the remaining $1,000 of your paycheck in cash.  So what are you going to do with all of that cash?  How do you properly manage it?  That’s where the envelope system comes in.  What it means is splitting up your cash and putting it in separate envelopes, with each envelope representing the amount of money you can spend within a certain time period or on a certain category of expense.

Budgeting Cash Envelope System Split CashAnd how do you decide how to split up your cash?  Of course it should be according to your needs, preferences, goals and personality.  It’s also vitally important that you split up your cash in a way that works best for you, with “working best” being defined as the system you’re most likely to follow to live within your means (which in this example means not spending more than your $1,000 of cash until your next paycheck).  With that flexibility in mind, there are 4 main schools of thought on how to split up your cash when applying the budgeting cash envelope system.

Method #1 – Divide You Cash Into Time Periods “Weekly Method”

Assuming there were 4 weeks in a month, if you wanted to divide your cash into time periods then you would put $250 in 4 separate envelopes labeled “Week 1” through “Week 4”. This budgeting cash envelope system would then use the $250 for week 1 to make all of your day-to-day purchase: groceries, gas, entertainment, etc.  If you elect to use this “Weekly Method” then you need to understand that spending needs for different weeks could be quite different.  For example, one week might be heavy on groceries, and another might be heavy on gas or other expenses.  Either way, if you maintain your discipline then the idea is that the week-to-week highs and the lows should average out.

But what if you happen to have a week that requires heavy spending for one reason or another?  While not ideal, you would either drastically cut your spending or, if necessary, you would borrow cash from the next week’s envelope to make it through.  On the flip side, what if you had a week with exceptionally light spending?  Rather than go out and blow the money, I would suggest putting in an additional envelope marked “Extra.”  That way you’ll have an additional source of cash to draw from if another week’s spending runs high.  Finally, if you end the month with any cash remaining then you’re in the enviable position of having extra money that you can either save or spend.

Method #2 – Divide Your Cash Into Categories of Spending “Category Method”

Budgeting Cash Envelope SystemAnother budgeting cash envelope system is an alternative to the Weekly Method of organizing your cash envelopes, you could use the “Category Method.”  You do this by creating separate envelopes for groceries, gas, fun/entertainment, savings and any other categories that make sense to you.  As you go through the month you draw cash from the appropriate envelope depending on what you’re spending money on.  If run out of money in a particular envelope then ideally you shouldn’t spend any more money on that category.  However, if it’s urgent (you need gas so that you can get to work) then you can take some cash from another envelope where you might have some extra (such as groceries, but now you might have to forego the chips and ice cream you wanted).

The upside of the Category Method is that it’s easier to predict how much money you’ll spend on various categories of expenses than it is to figure out how much you’ll spend in a given week.  For example, it’s much easier to estimate how much cash you’ll need for gas in total than it is to determine how much cash you might need for week 3 as opposed to week 4.  On the other hand, the Category Method can be difficult to apply in practice.

“Using Cash Into Categories Of Spending Takes Time To Get Use To, But It Is A Great Budgeting Cash Envelope System!”

To illustrate, say you’re going to the movies, but you’ve got to get some gas on the way, and you’re going to pick up some milk on the way home.  How are you going to handle that in the context of the Category Method?  Are you going to take your “Gas,” “Groceries,” and “Fun” envelops with you, and then pay for each with separate money?  Or are you going to take what you estimate what you need from each envelope and carry a combined amount of cash.  Do you know what category the cash that might already in your purse or wallet belongs to?  In which envelope(s) will you put any change you might have left over, or will it just stay in your purse or wallet?

In summary, while the Category Method is conceptually sound, it can be difficult to develop and perfect a system that will keep your cash in various categories segregated.  If this budgeting cash envelope system doesn’t sound right for you we have the lump sum method.

Method #3 – The “Lump Sum” Method

Cash Envelope System Lump Sum MethodYou might not want all of cash to be henpecked into specific categories of spending or artificially short time-frames.  In other words, forget all this envelope stuff.  The philosophy behind the Lump Sum Method is that you just want to know flat out how much money you have $800, how long it needs to last 1 month, and then be left alone to manage it as needed.

The appeal of the Lump Sum Method is that it conveys a sense of freedom “Wow, I have $1,000 of cash to spend however I want.”.  On the other hand, the Lump Sum can convey a false sense of freedom that can get you into financial trouble.  For example, let’s say that even if you’re very, very careful with your cash, essentially $700 will be needed over the course of the month for the very basics, such as food and gas.

If you lose sight of that and go out and the beginning of the month and blow $400 on “fun” just because you started out the month with big wad of cash, you’ll end up running out of money before the end of the month…even if you do nothing else fun or that you want to do (because you’ll only have $600 left, or $1,000 less $400, when you really need $700 at a bare minimum to cover real necessities such as groceries and transportation)!

My Observations Of The Budgeting Cash Envelope System Called The “Lump Sum” Method

In summary, my observation is that the Lump Sum Method can work very well with people that are highly disciplined with their money.  By “highly disciplined” I mean “stand at attention for 3 hours in the rain without moving a muscle” type of disciplined.  This budgeting cash envelop system is by far the most discipline of all methods that have been covered. On the other hand, if you have a single impulsive bone in your body when it comes to purchases “Hey, I wasn’t really looking to buy anything, but that seems like a good deal!”, then I would proceed very carefully before adopting the Lump Sum Method.

Method #4 – Combining The Budgeting Cash Envelope System Methods

In using the budgeting cash envelope system there’s no reason why you have to exclusively use any one of the above methods.  Instead, you can combine them any way you see fit according preferences, personality and goals.  For example, in thinking about how to split up your $1,000 you might decide to put $600 in an envelope marked “Groceries & Gas” and then divide the remaining $400 in 4 separate envelopes of $100 for weeks 1-4.  That way you have money set aside that’s dedicated to necessities, and you have an extra $100 each week to take care of everything else.  Again, that’s just an example; there’s no end to the combinations you can come up with in using the budgeting cash envelope system to meet your own customized needs and circumstances.