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These Enterprising Students Show How to Start a Food Delivery Business MAKING MONEY

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Read Time:10 Minute, 34 Second

Instead of turning to Uber, Lyft, DoorDash or Grubhub, these college students started their own food delivery businesses to make money and show their entrepreneurial expertise to potential employers.

Two met a demand created by the COVID-19 pandemic, while two others started their delivery businesses before 2020. They all saw a need on or around their campuses that wasn’t being filled.

Here’s what they did.

4 Successful Examples of How to Start a Food Delivery Business

1. Deliver Produce from Farms to Kitchens

Will Gentry and Gray Carlton devised a way to help local farms get produce safely to consumers during the pandemic and make money for themselves with their new business, Lexington Harvest Haul.

The seniors at Washington and Lee University in Lexington, Va., started thinking about their future enterprise last summer.

“There are a lot of farms that surround us, and we were noticing there wasn’t a great way for them to sell their stuff except at a farmers market once a week,” Carlton said. “We started brainstorming, thinking of what would be a good way to get their products to people. We came up with a system where we take orders based on what the farmers anticipate they’ll have each week.”

The students started by talking to various farmers at the farmers market to see if they would be interested in having their products delivered.

“They were extremely excited right off the bat. I was kind of surprised,” Gentry said. “I figured they were going to be set in their ways. But they are always looking for more sales avenues.”

The boys started a Facebook page, built a following in the community and collected more than 100 emails.

Here’s how the food delivery business works:

Customers place their orders on a website, Lexharvesthaul.com, by a weekly deadline. Carlton and Gentry go to five farms every Tuesday to buy all the produce, then sort the goods to assemble each customer’s order and deliver it all the same day.

“We don’t hold any inventory. It’s really unique,” Carlton said. They charge a $7.50 delivery fee, plus a markup of around 18% of the total order.

“Another benefit of what we do is customers can order from several different places and have it all come in the same package,” Gentry said.

A man sorts through fresh produce to deliver to customers.

So, a customer can order butternut squash from Sunflower Flats Farm, free range chicken from Hearthstone Farm, pimento cheese from Mountain View Farm, maple ginger cheesecake from Abundant Life Kitchen and Pink Lady apples from Dickie Brothers Orchard on one website, pay in one transaction and get it all brought to their doorstep for one delivery fee plus the markup.

Lexington Harvest Haul takes orders on a website powered by Shopify, which offers free templates for e-commerce sites, then charges $29 a month. The domain name cost $10.

In order to set up a bank account for the business, Gentry and Carlton paid $300 to form an LLC.

“We also wanted some protection (from possible lawsuits) because we were handling food. Not that either of us has too much to protect,” Carlton said with a laugh. “Having an LLC allowed us to plug into the local business community and open a membership in the chamber of commerce. That’s beneficial because there’s a pretty strong small business community in Lexington.”

They hope to sell the business to other students or someone in the Lexington community when they graduate in May.

“Sometimes I do think about how we could build a bigger business out of it,” Gentry said. “I try not to let myself go down that rabbit hole and make sure we get it right the first time.”

2. Deliver Food from Dining Hall to Dorm

BC GET was created when a Boston College student realized how much he and his friends dreaded going out in the cold to pick up food from the campus dining hall.

J.B. Bruggeman got the idea to charge a fee to deliver dining hall takeout and soon partnered with fellow student Jack Antico.

At first, there was very little technology involved. Students could order takeout from the dining hall, then text Bruggeman and he would go get the client’s student ID card then go pick up the food, swipe the card to pay for it, deliver the food, return the card and get paid around $5 via Venmo. After a proof of concept was established, Antico got involved.

“Then there was an issue with the dining hall because you aren’t technically allowed to swipe someone else’s card,” Antico said.  “I went to (Boston College) and said we proved there is a demand for this.” So, the college added a delivery option to the app students could already use to order food to-go.

A college student delivers good to another college student in the library.

As the demand grew, Bruggeman and Antico contracted with “getters,” who would receive a group email when a delivery order was placed. The first taker delivered the food and made $3.50. Antico and Bruggeman put the remaining $1.50 back into the business; they also delivered hundreds of orders themselves.

They marketed their meal delivery service in various ways, from a $150 banner hanging on a Boston College parking garage to a stunt in the middle of campus.

“I set up kind of a dorm room on the main quad and called it the Day of GET. J.B. lived in a tent, we had a TV set up outside,” Antico said. “We delivered all the meals to J.B. for 24 hours to showcase how useful the service could be. People walked by and wanted to know more about it.”

At its peak, BC GET had about 25 orders a day. Getters could make around $500 a semester. The founders made more, of course, though Antico declined to say how much. The two students ended their business partnership after a couple years when they each had different business interests and Boston College revamped its dining program.

The delivery business, however, must have looked impressive to potential employers. Bruggeman now works as a product manager for Facebook, and Antico, a BC senior, scored an internship at national grocery delivery business Shipt last summer and now owns a web development business.

3. Deliver Groceries to Homes — Without the Big Apps

When Manhattan College in the Bronx halted in-person classes because of COVID-19, Joseph Chionchio moved home to Bay Shore, Long Island. Soon, his mother told him about friends and neighbors who were waiting up to two weeks to get groceries delivered using the most popular apps.

“I saw a clear-cut opportunity right there. I started an Instagram page and made some posts saying I’d shop and deliver groceries,” Chionchio said.

At first, customers emailed him their grocery lists, but soon he set up a website where they could submit orders. He delivered during a timeframe he set each day around his online classes.

Chionchio named his new venture Smart Shop Delivery and spread the word on Facebook, along with asking local restaurants and influencers to post about his effort to help people who were having trouble getting groceries.

Most customers paid via Venmo, but if they were older and hesitant to use an app or share credit card information Chionchio smartly allowed cash and checks. He also accepted handwritten grocery lists. By taking a little extra time for these customers, he reached a market that wasn’t being served at all.

He charged a 15% fee based on the grocery bill for his delivery services.

“I made a lot of traction after a couple weeks,” he said. “Once I got six orders a day, I hired five drivers.” They were all friends or friends’ siblings.

Soon a local TV station did a story on the 21-year-old finance major, then New York’s Newsday newspaper covered the student entrepreneur, too.

“Once Newsday hit, the demand went up like crazy. I hired about 50 drivers,” Chionchio said. He also hired two administrative assistants to help process orders and verify drivers’ insurance and licenses.

Then Fox business anchor Neil Cavuto featured an interview with Chionchio.

“That was national,” he said, and demand went up even more. “We stopped advertising for a while. We were still in the process of building the infrastructure, and I was still in school.”

At this point, he also teamed up with friend John Kelly, who also graduated from Manhattan College and is currently working on his MBA there.

In April three apps — one for drivers, one for customers and one for retailers — will be available for Android and iPhone users. The customer app is called Smartshopcustomer.

Smart Shop Delivery has partnered with a small chain of grocery stores, Fresh by Nature, a coffee shop and a meat market. Customers in the Long Island area can place their orders on the app for those retailers, but still get groceries delivered from other retailers as well.

Chionchio continues to run the growing company as he pursues a master’s degree in financial engineering at Stevens Institute of Technology in Hoboken, N.J.

FROM THE MAKE MONEY FORUM

4. Deliver Food From Campus Gates to Dorm Rooms

Anthony Zhang created a business offering the second and final leg of food delivery at the University of Southern California. When he was a freshman in 2013, gates around the University Park campus near downtown Los Angeles were locked at 9 p.m. Students ordering a pizza, burrito or sandwich had to leave their dorm and meet the delivery person at the gate.

One night a friend of Zhang’s said he’d pay someone $10 to go get his Chipotle burrito once it arrived on the edge of campus. Zhang took him up on it.

He started doing the same for other friends, posted flyers around campus offering his late-night on-campus delivery, and his business, EnvoyNow, was born.

“It just had my phone number on there and said to text me. I got swarmed with orders the first weekend that I did it,” he recounted to the Los Angeles Business Journal in December. He hired other friends to start delivering and make $50 to $100 a night.

At first the orders were all texts to Zhang who passed them on to other delivery people. Then a computer science student who was a frequent customer built an app for the business.

Zhang skipped class one day to go see Shark Tank investor Mark Cuban and Survivor producer Mark Burnett speak on campus. At the end of the presentation, they took impromptu business pitches from the audience. On the spot, Burnett invested $100,000 for a 10 % stake in EnvoyNow.

Zhang received a lot of publicity and soon the Thiel Fellowship offered him a $100,000 grant. The fellowship is a two-year program for young people who want to quit or skip college to work on a business. He left USC in 2015 and expanded EnvoyNow to 22 campuses, according to a recent interview with Medium.com.

A year later Zhang suffered a diving accident in a Las Vegas swimming pool and was paralyzed from the neck down. After several months of rehab, in 2017 he sold EnvoyNow to JoyRun Inc., which was acquired by Walmart Inc. in 2020.

Since then, Zhang launched and sold another company that rates venture capital investors and now has started Vinovest, which gives retail investors a way to invest in fine wine.

Katherine Snow Smith is a freelance reporter and editor in St. Petersburg, Fla., and author of Rules for the Southern Rulebreaker: Missteps and Lessons Learned.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

MAKING MONEY

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How a Goodwill Letter Got a $10,000 Debt Wiped Off My Credit Report MAKING MONEY

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Read Time:5 Minute, 23 Second

My parents were in the middle of a long, drawn-out divorce when I left for college. My tuition got tied up in the legal battle. This led to a lot of confusion and ended with me leaving school early, holding a $10,000 overdue bill for tuition, room and board.

Over the course of six months, I paid off the entire balance. But even though the debt was paid off quickly, it still showed up on my credit report.

A few years later, I had a good credit score overall. But I was saving to purchase a home and wanted my score to be as high as possible so I’d qualify for a good mortgage rate. The tuition bill was the only negative line item.

That’s when someone suggested I try a goodwill letter.

What Is a Goodwill Letter?

A goodwill letter is a way to get accurate, negative line items removed from your credit report. The creditor who reports the negative line item has the power to remove it. So your goal is to write your creditor a letter that persuades them to do just that.

When a negative line item is removed from your credit report, it will likely make your credit score bump up. A higher credit score can improve your chances of getting approved for a loan, credit card, mortgage or even certain employment positions.

It’s important to note that if you find an error on your credit report, you shouldn’t write a goodwill letter. Inaccurate information can be disputed and then removed, which is an entirely different process.

How to Write a Successful Goodwill Letter

Most of the time, goodwill letters are not successful.

Mine was.

Here are the steps I took to draft a successful letter.

Be specific.

Your creditor likely only knows you as a number. The first thing you should address in your letter are the specifics of your situation. Be sure to include things like:

  • Your account number
  • Total amount of debt
  • When the debt was due
  • The date you paid off the debt in full

In my situation, I knew paying off $10,000 in six months was impressive given my income, so I stressed this aspect of the repayment. If you have similar circumstances, be sure to highlight them.

Explain your situation.

Goodwill letters are most successful when you went through an extraordinary circumstance and explain it. If your excuse is, ‘I knew I couldn’t afford to max out my credit card, but I just really wanted the new iPhone,’ you’re probably not going to be successful.

Extraordinary circumstances are things like divorce, job loss, natural disasters, domestic violence or economic abuse or unexpected medical emergencies.

In my situation, I explained why there was confusion around who would pay the bill, again stressing that once it became clear it was my responsibility I paid it off quickly.

Express regret.

At this point in your goodwill letter, you’re going to want to express regret for your late payments. You had every intention of paying on time — before that extraordinary circumstance popped up.

If you otherwise have a positive payment history with the company, you can bring that up here, too. Anything you can do to demonstrate financial responsibility helps.

Explain why you want the item removed.

Next, give a reason for wanting this line item removed. For example, maybe you need to purchase a car so you can get to work. But with the negative line item on your report, you can’t secure a car note at a reasonable APR.

By laying this out for your creditor, you’re letting them see how their help can change your life in tangible ways.

You can wrap up your letter by saying something along the lines of, ‘I hope you will consider removing this collection from my credit report as a gesture of goodwill,’ and thanking them for their consideration.

Provide supporting documentation.

If you have any documents supporting the claims in your letters, include them. For instance, if you lived through a natural disaster, any paperwork you can provide from FEMA or your insurance company may prove helpful.

You’ll also want to include a succinct record of your payments, including receipts or statements issued by the creditor.

In my case, I included a receipt of all payments and a printout of my financial record directly from the school’s website.

How Will I know if I’m successful?

I knew my school had removed the late payment from my credit report because they sent me a letter telling me they had. Your creditor may or may not notify you in the same way.

I followed up when I did my annual credit report check the next year. Sure enough, the late payment was removed from my report.

During the pandemic, you can check your credit report for free weekly, so you won’t have to wait an entire year to follow up. You could potentially even see the item removed before your creditor gets in touch.

What if My Goodwill Letter Is Rejected?

Your creditor is not obligated to remove accurate, negative line items from your credit report. You’re asking them to do it out of the kindness of their heart. Even after carefully composing my letter and making a good case, in the end I was lucky. Most goodwill letters are rejected.

If your goodwill letter doesn’t work, you’ll simply have to deal with the negative line item until it falls off your credit report, which typically happens after no more than seven years.

But if putting in the time to craft a compelling, one-page letter gives you a shot at changing your financial life years ahead of schedule, why not give it a try?

Brynne Conroy is a contributor to The Penny Hoarder.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

MAKING MONEY

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MAKING MONEY

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Read Time:5 Minute, 12 Second

These days, our pets are such a huge comfort to us. They’re huge stress relievers and help keep us sane in these crazy times. Study after study shows pets help stave off loneliness and depression.

Anyone who has a dog or cat knows the value of taking a quick mental health break to go pet Rover or Fluffy. They’re little four-legged antidepressants.

They do get a little expensive, though. Between pet food and vet bills, the cost of owning a cat or dog can quickly run into thousands of dollars. And these are tough economic times.

We’ve got six suggestions for simple financial moves you can make that’ll help you spoil Fido and Simba like they deserve.

1. Save Money on Pet Food

Pet owners spend hundreds of dollars a year on pet food. (How much exactly? It really depends on the pet.) You may as well be getting some money back.

Do you buy your pet food at the grocery store? A free app called Fetch Rewards rewards you with gift cards to places like Amazon or Walmart just for buying pet food and more than 250 other items at the supermarket. Just take a picture of your receipt showing you purchased an item from one of the brands listed in Fetch.

Or, do you buy your pet food online? This free service will send you an alert if you’re about to overpay. Just add it to your browser, and before you check out, it’ll check other websites to see if your item is available for cheaper. It’ll also automatically check for coupon codes you can use online.

2. Here’s How to Pay for Pet Insurance

Here’s how pet insurance works: You pay a small monthly fee, and the insurance covers any big, qualifying vet bills you get in the future. Like all insurance, it’s a bit of a gamble, because you never know if you’ll really need it, but the chance of facing at least one expensive vet bill is pretty high.

We recommend looking for plans with comprehensive coverage, so read the fine print and make sure the policy will cover what you might need. The best plans will cover everything from accidents to hereditary conditions to lab tests to emergency visits.

Some of the most popular pet insurance companies include Trupanion, HealthyPaws and Figo, if you want to start your research there!

How can you afford it? By lowering your bill for a different kind of insurance. For example, you’re probably paying too much for car insurance.

A free website called Savvy helps you find the best car insurance rates in just 30 seconds. It’ll even help you cancel your old policy and get you a refund from your current insurer. It saves people an average of $826/year.

3. Have an Emergency Fund for You and Your Pet

Owning a pet means you’re responsible for it. So it’s on you to act responsibly.

These days, part of responsibility is having an emergency fund. This past year has taught us the hard way that everyone should have one.

You need a place where you can safely stash your savings away — but still earn money on it. A typical savings account won’t pay you any interest these days. But a debit card called Aspiration lets you earn up to 5% cash back and up to 16 times the average interest on the money in your account.

Enter your email address here to get a free Aspiration Spend and Save account. After you confirm your email, securely link your bank account so they can start helping you get extra cash.

4. Does Your Dog Deserve Its Own Yard?

Let’s think bigger. Are you an apartment dweller? Or do you live in a house with a small yard?

You might have dreams to buy a house one day — one with a nice big yard for your furry friend.

To buy a house, you’ll need a good credit rating. It really makes a big difference. If you’re looking to get your credit score back on track — or even if it is on track and you want to bump it up — try using a free website called Credit Sesame.

Within two minutes, you’ll get access to your credit score, any debt-carrying accounts and a handful of personalized tips to improve your score. You’ll even be able to spot any errors holding you back (one in five reports have one).

Want to check for yourself? It’s free and only takes about 90 seconds to sign up.

5. Take Care of Your Pet Forever

Have you thought about how your family would manage without your income after you’re gone? That includes your cats and dogs. Chances are your checking account balance won’t last forever.

If you want to leave your family up to $1 million to care of things like funeral expenses and college tuitions (and pet food), use something called term life insurance.

We suggest a company like Bestow. Maybe you’ve considered this before, but thought it was only for rich or older people. But we’re hearing that people are getting it for as little as $16 a month.

You can take advantage of Bestow until you’re 54 years old, but the sooner you take care of this, the cheaper it could be.

You don’t even need to leave your house to get a free quote from Bestow — it takes minutes. Instead of leaving your family with what’s in your checking account and a bucket of worries, they’ll be able to afford the life you’ve always wanted for them.

And they’ll be able to afford to feed Sparky and Muffin forever.

Mike Brassfield (mike@thepennyhoarder.com) is a senior writer at The Penny Hoarder. He has multiple cats and dogs.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

MAKING MONEY

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MAKING MONEY

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Read Time:4 Minute, 47 Second

Close your eyes for a few moments and think of the first place you’ll go post-pandemic.

Are you hiking to Machu Picchu? Dining on Kobe beef (in Kobe)? Sipping something strong and fruity on a white sandy beach? Perhaps you’re just crossing state lines to see family or friends?

Wherever your mind took you, didn’t you feel a little bit more relaxed in those few seconds?

No, this isn’t a lesson in meditation. It’s proof that planning a vacation — and the anticipation of experiencing it — can bring people just as much joy as being on the trip itself. A 2014 study from the University of Cornwall found that this delayed gratification was more pleasurable than the immediate kind you get when you order next-day Amazon delivery.

So, step away from your online cart and start planning your next vacation, however far out it may be. But make sure it’s attainable, otherwise you’ll be crushed when you realize you can’t afford it. That’s why we brought together these four ways to save up to $865 for a future getaway.

1. Start A Vacation-Only Savings Account

Setting money aside in a separate account can be a smart and safe way to protect your travel budget. You can’t accidentally buy a pair of shoes with your hotel money that way! You’ll be able to set a goal and watch the budget grow as you save more and more.

Here’s a budget hack: Get an account that gives you free money for signing up and a high interest rate to grow that money faster. We found a company that will give you $100 just for opening a new debit card. It’s called Aspiration.

Sure, a lot of debit cards offer sign-up bonuses throughout the year, but they often require you to jump through hoops with minimum requirements that feel impossible to hit.

But Aspiration makes it simple. To earn your $100, here’s all you need to do: Open your Aspiration account and deposit at least $10. Then set up and receive three direct deposits of at least $500 each from your paycheck or government benefits. That’s it! Then just wait for your check.

Even better? Your debit card gets you up to 10% cash back on your purchases and 16 times the national average of interest on your savings.

Enter your email address here, and link your bank account. And don’t worry. Your money is FDIC insured and under a military-grade encryption. That’s nerd talk for “this is totally safe.”

2. Cut Your Expenses and Save The Excess

If you’re overspending every month, it’ll be difficult to find the cash for your next vacation — because you still need to be adding to your emergency fund and retirement fund, too.

Here’s a quick fix: cut your car insurance rate. When’s the last time you even checked car insurance prices?

You should shop your options every six months or so — it could save you some serious money.

A website called Insure.com makes it super easy to compare car insurance prices. All you have to do is enter your ZIP code and your age, and it’ll show you your options.

Using Insure.com, people have saved an average of $489 a year.

Yup. That could be $500 toward your trip just for taking a few minutes to look at your options.

3. Get Paid Every Time You Go Shopping

Your trip is likely several months away (or more), which means you still need to shop for your everyday essentials. You might as well make money for them — and earn gift cards to use for your travel needs. You’re going to want a good neck pillow for that 8 hour plane ride, trust us.

A free app called Fetch Rewards will reward you with gift cards just for buying toilet paper and more than 250 other items at the grocery store.

Here’s how it works: After you’ve downloaded the app, just take a picture of your receipt showing you purchased an item from one of the brands listed in Fetch. For your efforts, you’ll earn gift cards to places like Amazon or Walmart.

You can download the free Fetch Rewards app here to start getting free gift cards. Over a million people already have, so they must be onto something…

4. Earn $225 Killing Time Before Your Trip

If we told you you could get free money just for watching videos on your computer, you’d probably laugh.It’s too good to be true, right? But we’re serious.

A website called InboxDollars will pay you to watch short video clips online. One minute you might watch someone bake brownies and the next you might get the latest updates on Kardashian drama.

All you have to do is choose which videos you want to watch and answer a few quick questions about them afterward. Brands pay InboxDollars to get these videos in front of viewers, and it passes a cut onto you.

InboxDollars won’t make you rich, but it’s possible to get up to $225 per month watching these videos. It’s already paid its users more than $56 million.

It takes about one minute to sign up, and you’ll immediately earn a $5 bonus to get you started.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

MAKING MONEY

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Stimulus Bill Gives You a Tax Break on 2020 Unemployment Benefits MAKING MONEY

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Read Time:6 Minute, 20 Second

If you got unemployment benefits in 2020, you just got a tax break courtesy of the $1.9 trillion American Relief Plan that President Joe Biden signed into law on Friday. Here’s how the latest relief bill could affect your taxes.

How the Relief Bill Affects Your Taxes if You’re Unemployed

Let’s back up: Is unemployment taxable? Unfortunately, the answer is yes — and that can seem like Uncle Sam kicking you when you’re already down.

The American Relief Plan provides a small measure of relief: The first $10,200 of unemployment compensation will be shielded from taxes for households with incomes under $150,000 in 2020.

The IRS hasn’t yet issued guidance for people who received benefits in 2020 but have already filed a tax return. It’s likely in this situation that you’d need to file an amended tax return to adjust what you owe.

Note that this exemption only applies to 2020 taxes. If you’re still receiving unemployment, you should still expect to pay taxes on the full amount when you file your 2021 return next year.

How Are Unemployment Benefits Taxed?

Many people are surprised to learn that they have to pay taxes on their jobless benefits. A Jackson Hewitt survey found that 39% of adults weren’t aware that unemployment is taxable. Here’s a breakdown of how taxes on unemployment benefits work.

Federal Income Taxes

When you receive unemployment benefits, they’re taxed at the federal level as ordinary income.

That means if you got $15,000 from unemployment during a typical year, it would be taxed in the same income tax brackets as it would if you’d earned $15,000 from a job. But you wouldn’t owe payroll taxes, i.e., Social Security and Medicare taxes, on your benefits.

Because the new relief bill exempts the first $10,200 from taxes, you’d only be taxed on $4,800 if you received that same $15,000 of unemployment benefits in 2020.

Unemployment compensation can affect your tax bill in other ways. As many as two-thirds of people who got the $600 weekly CARES Act supplements that ended in July were making more money than they were from working. If your 2020 income was higher than it normally is because of your jobless benefits, you may find that you’re no longer eligible for some tax credits, like the earned income tax credit.

State Income Taxes

At the state level, it looks a little different. If your state is one of the nine that doesn’t have an income tax, it’s easy: You won’t owe state taxes on your unemployment. Of the remaining 41 states, the following five exempt unemployment from taxes:

  • California
  • New Jersey
  • Oregon
  • Pennsylvania
  • Virginia

A few others partially tax unemployment, but in most states, your unemployment is fully taxable.

How Do I Pay Taxes on My Unemployment?

There are two basic ways to pay federal taxes on your unemployment. Because the U.S. has a pay-as-you-go tax system, neither answer is “pay it all next year” — though as we’ll discuss shortly, the consequences for doing so aren’t too harsh.

Automatic Withholding

This is how it works when you’re employed and your employer automatically takes out a portion of your check for taxes. You can opt to have 10% of your benefits automatically withheld, but you don’t get the choice of having more or less withheld.

When you first apply for benefits, you’ll have the option of filling out IRS Form W-4V for voluntary withholding. If you’re already receiving benefits, you can still submit Form W-4V to your state office to change your withholding.

Estimated Quarterly Payments

The IRS says you should make quarterly estimated payments if you expect to owe at least $1,000 in taxes from all your income sources and you haven’t had at least 90% of what you’ll owe for the year withheld. Alternatively, you’re in the clear if you had 100% of the prior year’s tax bill withheld if your adjusted gross income is under $150,000, or 110% if your AGI is over $150,000.

What if I Haven’t Had Taxes Withheld?

There’s no need to panic if you haven’t had taxes withheld on your unemployment compensation.

A lot of people are in that situation. Either they haven’t had taxes withheld because they’ve needed their entire check to survive, or they just didn’t know they had to pay taxes on their benefits.

If you’re still receiving benefits and the 10% withholding wouldn’t threaten your ability to pay for your basic needs, we suggest submitting Form W4-V to your state unemployment office ASAP.

The worst-case scenario: You owe money on April 15 and can’t afford the bill.

While the IRS may have a reputation for making grownups cry, owing money at tax time isn’t as terrifying as it sounds, so long as you file a tax return on time. (You can get more time to submit your return if you file for an extension, but the tax bill is still due on April 15.)

In most situations, you can automatically get approved for a payment plan that will cost you just 0.5% in interest per month, up to 25% of your overall bill. If you can afford to pay the entire bill within 120 days, you won’t incur additional fees. Otherwise, you’ll pay $31 to set up a direct deposit payment plan online or $107 to set it up by phone or email, or in person.

Of course, the IRS will encourage you to pay as much as you can afford, but you can select a monthly payment that’s as low as the total amount you owe divided by 72.

Fees aside, 0.5% per month works out to 6% per year. By comparison, the average credit card interest rate is over 17%, which makes the IRS look like a pretty generous creditor. For that reason, we’d suggest going with a payment plan when you can’t afford a tax bill, rather than charging it to a credit card.

You may also qualify for certain tax credits that will offset the amount you owe.

Just make sure you file a tax return next year, even if you can’t afford to pay. The failure to file penalty is pretty steep at 5% per month up to 25% of your tax bill.

The bottom line: You will pay taxes on your unemployment compensation. Pay them upfront either automatically or quarterly if you can. But know that if you owe taxes on your benefits next year, that doesn’t spell doomsday for your finances.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. She writes the Dear Penny personal finance advice column. Send your tricky money questions to AskPenny@thepennyhoarder.com.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

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Your $1,400 Stimulus Check May Arrive at 9 a.m. St. Paddy’s Day MAKING MONEY

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If you’re waiting on your third stimulus check, St. Paddy’s Day could be your lucky day. Although the IRS started issuing payments over the weekend, for tens of millions of people Wednesday, March 17 is the day those $1,400 payments will actually appear in bank accounts. Here’s exactly when you can expect to see your third stimulus check.

Why You Still Haven’t Gotten Your Third Stimulus Check

The IRS started making payments last Friday, just one day after President Joe Biden signed the $1.9 trillion American Rescue Plan into law. But you probably haven’t seen that money as of Tuesday, March 16.

That’s because the National Automated Clearing House Association, which oversees direct deposits for many banks and credit unions in the U.S., allows the sender — here, the IRS — to determine when the funds will become available. The IRS chose March 17 for its first round of payments in this case.

Online bank Chime and banking apps Current and Square’s Cash App didn’t wait for funds to settle. They made stimulus checks available to users over the weekend. But the vast majority of banks require you to wait until the official payment date to access funds.

At 8:30 a.m. local time on Wednesday, those funds will clear, meaning they’ll officially be sent from IRS coffers into bank accounts. Banks and credit unions are required to make those funds available to customers at 9 a.m. Wednesday.

That means tens of millions of people with up-to-date direct deposit information will have their third stimulus check in their bank account at 9 a.m. Wednesday.

Who Won’t Get a Stimulus Check on March 17?

This is just the first round of payments for the third stimulus check, so don’t panic if yours doesn’t arrive tomorrow. You can track your check using the IRS Get My Payment feature. Information only updates once a day, though, and it’s often slow given the high demand.

If you’ve closed the account the IRS has on file for you, expect to wait a couple of weeks. You can’t update banking information through the IRS website. Your old bank will reject the deposit and send it back to the IRS. Then you’ll receive your payment in the mail, either as a check or prepaid debit card.

People who received the first two stimulus checks in the mail will most likely get this round in the mail, too. The IRS hasn’t announced when it will start mailing payments, but it’s expected to start sending them by the end of March.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. She writes the Dear Penny personal finance advice column. Send your tricky money questions to AskPenny@thepennyhoarder.com.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

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This Map Shows Exactly What Your State Pays Unemployed Workers MAKING MONEY

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Depending on which unemployment program you’re on and where you live, you can expect about $490 to $800 per week from jobless benefits, according to a new analysis of unemployment benefits data conducted by The Penny Hoarder.

That won’t change under the new stimulus bill.

Use the maps below to estimate how much your state pays in weekly unemployment benefits. The new stimulus bill extends extra unemployment benefits until Sept. 6.

A State-by-State Breakdown of Unemployment Benefits

Unemployment Insurance (UI) is a longstanding jobless benefits program run by state unemployment agencies. Refer to these estimated weekly figures if you are on a state-level UI program or any of the unemployment extension programs, including the federal extension known as Pandemic Emergency Unemployment Compensation (PEUC).

Weekly payment amounts vary widely by state — and may even vary person-to-person within your own state. The information in the map is an estimate based on a state-by-state average of weekly UI payments, which is compiled by the Department of Labor.

Pandemic Unemployment Assistance Boost Under the American Rescue Plan

Pandemic Unemployment Assistance is a new federal unemployment program established by the first stimulus package. If you’re a gig worker, freelancer or independent contractor, you’re likely to receive benefits through this program.

The Department of Labor does not compile payment data for PUA as it does for Unemployment Insurance programs. However, the stimulus law states that as a PUA recipient, you’re entitled to a minimum weekly benefit amount that’s equal to half your state’s average UI payment. This map uses the same data from the DOL as the first map, and estimates payments based on half of each state’s average UI payment.

So, the estimated amount is the minimum PUA payment plus $300 from the federal government.

Trouble navigating all those jobless programs? Use our plain English guide to unemployment benefits to get the aid you need.

Adam Hardy is a former staff writer at The Penny Hoarder.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

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10 FAQs About the $3,000 Stimulus Child Tax Credits MAKING MONEY

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The $1.9 trillion stimulus bill President Joe Biden signed into law on Thursday contains good news for parents: In addition to getting $1,400 stimulus checks for each dependent child, most parents will qualify for extra child tax credit money for children 17 and younger.

10 FAQs About the Expanded Child Tax Credit

The American Relief Plan makes the current $2,000 child tax credit more generous for most parents. Families can receive up to $3,600 for each child under 6 and up to $3,000 for each child ages 6 to 17. We’ll update this post as we get more information.

1. Who qualifies for the expanded child tax credit?

Single parents making less than $75,000 a year, heads of household earning $112,500 and married couples earning less than $150,000 would qualify for:

  • $3,000 ($1,000 extra) for each child between the ages of 6 and 17.
  • $3,600 ($1,600 extra) for each child younger than 6.

The extra $1,000 or $1,600 would phase out at the same rate as the first stimulus check and second stimulus check: For every $1 you make above the income limits, the additional credit is reduced by 5 cents until it disappears completely.

2. Have the rules changed for people making over these amounts who normally qualify for the $2,000 tax credit?

No. If you make above the limits for the expanded credit, you can still qualify for the regular $2,000 child credit. Parents who are single receive the full $2,000 per child if their income is less than $200,000. Parents who are married receive the full $2,000 per child if their combined income is less than $400,000. For incomes above these limits, the credit gradually phases out.

3. When will we receive the payments?

Half of the credits will be sent out in monthly installments between July and December. Parents would receive the remaining half as a tax refund when they file their 2021 tax returns next year.

So a family that qualifies for the $3,000 credit with one 7-year-old would receive $250 monthly payments from July through December, and then get the remaining credit as a tax refund in 2022.

4. What tax returns are the payments based on?

Because payments won’t begin until July, they’ll be based on your 2020 tax return. Technically, though, they’re an advance on a tax credit for 2021.

The stimulus checks worked exactly the same way. The first two checks were an advance on a 2020 tax credit that were based primarily on 2019 income. The third check is an advance on a 2021 tax credit that will be based on your 2020 or 2019 return, depending on whether you’ve filed.

5. Who gets the credit if the parents are divorced or don’t live together?

The parent who claims the child on their 2020 tax return will receive the credit. However, for parents who take turns claiming a child on their tax returns, it’s unclear how this would work.

For stimulus checks, if Parent A claimed a child on their 2019 tax return, they received $1,100 worth of stimulus money during 2020 on the child’s behalf. If Parent B claimed the child for 2020, they’ll receive $1,100 as a tax refund.

6. Would babies born in 2021 qualify?

Yes, but their parents most likely would not receive monthly payments for July through December because the IRS won’t have any record of the child. Instead, parents would need to file a 2021 tax return next year and get the entire $3,600 as a refund.

7. Will I have to pay back the credit if I’m eligible for less based on my 2021 taxes?

Possibly. Singles with an income below $40,000, heads of household with an income below $50,000 and married couples earning $60,000 or less would be exempt from repaying any overpayment.

However, single filers earning more than $80,000, heads of households earning $100,000 and married couples earning $120,000 would have to repay the entire overpayment with their 2021 taxes.

8. Are 17-year-olds included?

Yes. The bill increases the age limit for child tax credits from 16 to 17.

9. Do you need earned income to get the credit as a refund?

No. Under the normal rules, only $1,400 of the $2,000 child credit is refundable, meaning you can receive up to $1,400 as a refund. To get that refund, you need at least $2,500 of earned income.

However, the temporary rules allow the entire credit of $3,000 (or $3,600 for kids under 6) to be refundable. You won’t need earned income to receive the refund.

10. Are these changes permanent?

No. While some Democrats are pushing to make these changes permanent, as things currently stand, they’ll only apply in 2021.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. She writes the Dear Penny personal finance advice column. Send your tricky money questions to AskPenny@thepennyhoarder.com.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

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5 Estate Planning Moves to Make for Under $100 MAKING MONEY

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If you died tomorrow, who would get your money and property? Who would you want to care for your children? What about your pets?

Let’s face it: The past year has made us all think about our own mortality a lot more. But creating an estate plan with an attorney can be expensive, sometimes costing thousands of dollars. That’s a lot of money at a time when so many people are strapped for cash. Fortunately, there are a few things you can do to be prepared even if you don’t have much money to spare.

Yes, You Have an Estate

An estate may seem like something you only have if you’re Warren Buffett or your last name is Vanderbilt. But your estate is simply everything you own. If you have money in a checking account, a car, a house or a painting on your wall, all of that counts as part of your estate, even if none of it’s worth much.

What Is Probate and Why Do I Want to Avoid It?

Probate is the court-supervised process of distributing your assets when you die. During this process, your assets are frozen, meaning they can’t be sold, and creditors get first priority. Everything becomes part of the public record. This process can often take over a year, though it’s a lot simpler if you have a will. Even if you have a will, your instructions can be contested.

Someone who dies without a will is said to die intestate. When that happens your property gets distributed by a court-appointed trustee according to the laws of your state, rather than according to your wishes.

Though probate isn’t completely avoidable, some assets can be transferred outside of the probate process. That’s typically preferable, due to the time and lack of privacy you get in probate.

When you designate beneficiaries for your assets like your retirement plans and bank accounts, you avoid probate. Beneficiary designations supersede your will, which means if you name someone as your beneficiary, they get the money, even if your will says someone else gets all your assets.

5 Easy Estate Planning Moves You Can Make Today

Let’s be clear here: This is not a comprehensive estate-planning guide. There are infinite ways things can go wrong in estate planning, and we’ll outline a few of them.

In some situations, you absolutely need to consult with an experienced attorney — such as if you own significant assets, you’ve been married multiple times or you think it’s likely that someone in your family would mount a challenge to your final wishes. But these are some steps that can help you get started.

1. Make your bank account payable upon death.

If you have a bank account or certificate of deposit, you can make the accounts payable upon death. That means the beneficiary you name will get the money in your account when you die without it going through probate.

Making an account payable on death is as simple as filling out a form with your bank or credit union. In some cases, you can do this online. You can also change the beneficiary at any time by filling out another form.

When you die, the beneficiary automatically becomes the owner of your account. To claim the money, they’ll only need to provide identification and a certified copy of your death certificate. Note that if it’s a joint account, the beneficiary has no claim to the money until after the final account owner has died.

If you’re married and live in one of the nine states known as community property states — Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin — your spouse is entitled to half the money unless the money was yours before you got married or you received it as a gift or inheritance.

2. Review your beneficiaries for your retirement accounts and life insurance policy.

Suppose you’ve divorced and still have your ex-spouse listed as the beneficiary of your life insurance policy or 401(k) plan. Your ex will get the money, even if you’ve remarried and your will states that your new spouse gets everything you own.

If you have multiple retirement plans and insurance policies, it can be easy to lose track of them. Make a list of all life insurance policies and retirement, investment and bank accounts, and review the beneficiary designations. Set a date to review those designations at least once a year. Any time you have a major life event — a divorce, birth of a child or the death of someone you may have listed as a beneficiary — be sure to update those designations.

If the beneficiary you named has died, the account will likely wind up in probate.

3. Create an advance directive.

Advance directives are legal documents that specify what type of medical care you want if you’re unable to make decisions for yourself. They can include:

  • A living will: This document specifies your wishes for end-of-life care. It only becomes effective once two physicians separately determine that you’re no longer capable of making decisions for yourself.
  • Medical power of attorney, or health care proxy: This is someone you designate to make medical decisions on your behalf. It can be a family member, though it doesn’t have to be.
  • Do-not-resuscitate order, or DNR: An order that tells your doctor not to perform CPR if your heart stops beating.
  • Wishes for organ and tissue donation.

You don’t need an attorney for an advance directive, but the rules vary from state to state. Most states will require two witnesses to be legally binding. Keep in mind that an advance directive that’s valid in one state may not be recognized in a different state.

The National Hospice and Palliative Care Organization maintains advance directive forms for download for all 50 states, Washington, D.C., and Puerto Rico. Once you’ve completed the forms and signed them in accordance with your state laws, make several copies and give them to family members, the person you’ve designated as your medical power attorney, and your physicians. Anyone who is likely to be involved in your health care should have a copy.

4. Write a last will and testament online.

A number of websites let you create a last will and testament online for $100 or less. You’ll typically only want to use these products if your estate is relatively simple, i.e., your assets are limited, you don’t have a child with special needs or estranged family members who are likely to contest the document. A few options include:

  • Nolo’s Quicken WillMaker & Trust 2021, $99. Includes over 35 documents,  including a will, living trust and health care directive. Documents aren’t valid in Louisiana, U.S. territories or Canada.
  • Rocket Lawyer, $39 per document for nonmembers or $39 per month for membership. Some attorney services are also included with the membership.
  • Willing.com, starts at $69 for online wills. For more information, check out our full Willing.com review.

Note that if you have minor children, it’s well worth the cost to spend money on an attorney. You need to make sure that your plan for their guardianship is airtight. Also, minors can’t legally take ownership of property until they reach the age of majority, which is 18 to 21, depending on your state, so you’ll want an attorney who can determine the best way to structure any potential inheritance.

5. Talk to your family members about your final arrangements.

Even though you can specify your wishes for funeral, including whether you want to be buried or cremated, often final arrangements have already been made by the time estate-planning documents are located.

That’s why it’s essential to talk to your family about your wishes, no matter how morbid it seems. You can leave written instructions to document your wishes, but there’s no guarantee that your loved ones will actually follow them. Talking through your wishes is essential.

If your family is grieving your unexpected death, they aren’t in a great position to make decisions. They may be vulnerable to being upsold on certain funeral costs, even if that’s not what you’d want.

For example, a traditional funeral and burial can cost upward of $10,000. But maybe you’d be fine with a direct cremation and memorial service, which could cost $2,000 or less. By telling your family what you’re OK with, you’re giving them permission not to spend money on things that aren’t important to you.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. She writes the Dear Penny personal finance advice column. Send your tricky money questions to AskPenny@thepennyhoarder.com.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

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When Will Your $1,400 Stimulus Check Arrive? 10 Things We Know MAKING MONEY

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A $1,400 stimulus check could be hitting your bank account or mailbox soon. Most Americans will receive a third direct payment after President Joe Biden signed a $1.9 trillion COVID-19 relief bill into law on Thursday.

Most of the rules surrounding the first two payments are the same, with two big exceptions: Checks will completely phase out for higher earners faster than they did in the first two rounds. And if you can claim an adult dependent on your return — your college-age child or a disabled family member, for example — you’ll still get a payment on their behalf.

10 FAQs About the $1,400 Stimulus Check

Here’s everything we know so far about the third stimulus check. We’ll update this post as more information becomes available.

1. What are the income limits for the $1,400 payments?

The income limits for receiving the full $1,400 for single filers and heads of households, or $2,800 for married couples filing a joint return, are the same as they were for the first stimulus check and the second stimulus check. However, for people earning above these amounts, the checks would phase out at a much faster rate compared to the first two rounds.

2. Is there a credit for children?

Yes, you’ll receive an additional $1,400 for each dependent, regardless of their age. That includes not only children but adults who count as dependents. That’s one key difference between the third check and the previous two: The first two payments excluded anyone over age 17 who was listed as a dependent, which meant lots of college students and disabled people didn’t qualify.

However, the phaseout of the dependent credit applies at the same rate as the payments for people who file their own tax returns. Whether you have one dependent or 10, if you earn more than the $80,000, $120,000 or $160,000 thresholds listed above, you don’t get a dependent credit.

3. What tax year will payments be based on?

Your payment will most likely be based on your 2020 income if you’ve already filed your tax return. If you haven’t filed yet or the IRS hasn’t accepted your return, your check may be based on your 2019 return.

If you earned more in 2020 than in 2019, you could get more stimulus money if you delay filing. However, if your income dropped significantly or you had a child in 2020, you’d want to file ASAP to get the most out of this round of stimulus payments. You could also be eligible for more stimulus money from the first two checks based on your 2020 return.

4. Can I qualify based on my 2021 income?

Yes, if you aren’t eligible based on your 2020 income (or 2019 if you haven’t filed), you could get the third stimulus check as a tax refund when you file your return in 2022. That’s because the payments are an advance on a 2021 tax credit. Because lawmakers want to distribute that money ASAP, they’re basing it on 2020 or 2019 income instead of making you wait until 2022. If you have a child in 2021, you’d also be able to get a stimulus payment on their behalf next year at tax time.

And if you get a payment because of your past tax returns but you wouldn’t be eligible based on your 2021 income? Congrats. You win. There’s no “clawback” provision for stimulus checks, meaning you won’t have to pay it back.

5. I’m in college. Do I get my own check?

Maybe. You won’t be eligible to receive your own check if your parents can claim you as a dependent on their 2020 return, though in that scenario, they may receive a $1,400 credit on your behalf.

However, if you don’t qualify as a dependent for 2020 — meaning you provided more than half of your financial support for the year — file a tax return ASAP, even if you’re not required to based on your income. Not only could you qualify for the $1,400 from the third payment, but you could get $1,800 from the first two payments as a tax refund.

6. Are the checks taxable?

No. Your stimulus check isn’t taxable. That applies to this round and the previous two.

7. I’ve never filed taxes before. Can I get the third stimulus check?

Yes, but you’ll need to file a 2020 tax return, even if you’re not required to. You can use the IRS website to file for free as long as your income is less than $72,000, or you can use free tax filing software. The important thing is to file online instead of submitting a paper return. The IRS is facing an enormous backlog of mail due to COVID-19. Submitting by mail could add months to your wait time.

8. I’m on Social Security and don’t have to file a tax return. Do I have to do anything to get my check?

No. If you’re eligible based on the income threshold (see Question #1), you should qualify for a check. The IRS can get the information it needs to cut you a check from Social Security. If you receive Railroad Retirement, SSI, SSDI or VA benefits, the IRS can also get the information it needs from the appropriate agency to process your payment. No action should be required on your part.

9. I owe child support. Will I get the third stimulus check?

The third stimulus check won’t be offset for unpaid child support, so as long as you meet the other requirements, you can still expect a payment. While the first stimulus check rules required payments to be garnished for unpaid child support, parents delinquent on payments were eligible for the second round. None of the three stimulus payments have been garnished for other debts, including back taxes or unpaid federal student loans.

10. When will I get my payment?

Biden said on March 6 that checks would start going out this month. Based on what we saw with the second stimulus check, payments could start arriving in less than a week. Taxpayers who have current direct deposit information on file with the IRS will get their checks fastest. Those who file a paper tax return or who don’t receive direct deposit will likely be waiting at least a couple extra weeks.

For the past two rounds, the IRS has allowed taxpayers to track their checks using the Get My Payment tool on its website. The tracker isn’t live for the third round, but we’ll update this post when it becomes available.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. She writes the Dear Penny personal finance advice column. Send your tricky money questions to AskPenny@thepennyhoarder.com.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

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