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👜 Buy now, pay whenever?

February 11, 2021 Sign up
TOGETHER WITH Finny

Happy Thursday to you all!  Love is in the air, and with Valentine's Day fast approaching, we have a lovely offer from our partner blooom (read below).

Here are the money topics we'll cover today:

  • Buy now, pay later.  A terrible idea or pure genius?
  • Planning.  Will you be able to afford date night 30 years from now? This free tool can help you calculate your estimated monthly retirement income.
  • Winter hacks. Tips to save on your energy bill.

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DEBT

Buy now, pay later. A terrible idea or pure genius?

Have you ever noticed a feature that allows you to buy something now and pay over some number of equal payments spread across the next few weeks or months?  If you hadn't, next time you shop online look closely.  Because there is a new payment method in town called Buy Now, Pay Later (aka BNPL).

How does BNPL work exactly?

BNPL is offered as a payment option, alongside your everyday credit and debit cards, or PayPal.  For example, BNPL lenders like Klarna or Affirm allow you to buy that $100 coffee machine you've always wanted by paying only $25 at checkout, and then $25 automatically every two weeks until you’ve paid it off completely.  Sounds interesting, right?

Well, there’s more...

  • No credit check is required. BNPL companies ask for a few personal details and use an algorithm instead of a full credit check, so you don’t need credit history to qualify. 
  • It's frictionless, as folks are typically approved instantly.
  • And plans typically charge no interest.

So what’s the catch?    

Even though BNPLs offer interest-free periods, penalties for late payments can be steep (even steeper than those for credit cards).

BNPL will rarely improve your credit, but it can hurt it.  While you don't build credit for making on-time payments, your credit score could get dinged when you're late, especially if the balance is turned over to a collection agency.

Unlike credit card companies that make money from interest payments, BNPL revenue comes primarily from stores.  And retailers are willing to fork over the money because, with this option, consumers are shopping more regularly and spending more dollars.

Retailers love BNPL because it solves a big problem in the industry — shopping cart abandonment.  Shoppers like it too because it's easier to get something they otherwise wouldn't be able to afford.  Not to mention impulse purchases!

Our take

💡 When used responsibly, BNPL can be a nice way to spread out your spending and make it easier to purchase things you need or want.  And BNPL can help you with your cash flow when you don't have enough cash on hand.

💡 Don’t overlook the fine print because this could lead to costly mistakes down the road.  BNPL vendors make it almost too easy to transact, so you could be signing up for a bad deal.

💡 BNPL is still a loan, and like other debts, it can hurt your financial health if not managed wisely. If you tend to overspend, BNPL will further amplify that. If you decide to go down the BNPL route, use it wisely and exercise caution!

PRESENTED BY BLOOOM

Can you afford date night 30 years from now?

When it comes to saving for our own future, there is one part too many of us neglect—better managing our retirement savings.  That's because we "think" our retirement plans like a 401(k) or an IRA are on autopilot or we neglect them because they are too complex. 

But what if we told you that most retirees wished they had taken retirement planning seriously, and avoided those costly mistakes?  

Simply saving for retirement is a GREAT first step.  However, beyond that, it gets confusing real fast.  Should I rollover my 401k?   Which funds are the best for me?   Am I paying my advisor too much?

Sound familiar?  If you can understand these three things about your investment strategy, you will be well on your way to saving smarter...

💗  Fees.  They can significantly eat into your retirement savings.  Administrative fees, internal fund expenses, and management fees are important to understand but can be hard to decode.

💗  Time Horizon.  Your investment plan should be based on your time horizon and retirement goals, not on the market.  Plan to make adjustments as you get closer to your goal.

💗  Risk Tolerance.  It tells you how much of a loss you're prepared to handle within your portfolio.  Some people are naturally more comfortable with risk-taking than others, so a retirement portfolio should reflect that!

Take control of your hard-earned dollars

The good news is, there is a new kind of advisor in town called blooom.  They offer tools to help you optimize and manage your retirement accounts for a fraction of the price of a traditional advisor.

Blooom started several years ago with the sole purpose of bringing badly needed financial advice and management to the massive number of American retirement savers who have been left behind by Wall Street and largely forced to manage their retirement savings themselves.

Blooom offers free tools and insight to people ready to take back control of their hard-earned dollars.  Founder, Chris Costello says, "Try the free tool.  We hope you're empowered to make positive changes on your own, or hire blooom to help you get back on track!"

Get started with a free analysis And get $20 off if you sign up for blooom's paid service.  Use promo code LOOOVE.  Happy Valentine's Day!

WINTER SAVINGS HACKS

Tips to save on your energy bill

With record low temperatures in many parts of the country and beyond, here are some quick tips for saving on your energy bill. 

👉 Turn down the thermostat at night.  You'll be amazed at how much you'll save by not dissipating unnecessary energy.  And in fact, the US Department of Energy estimates a 1% annual savings for each degree of thermostat adjustment over an eight-hour period.

👉 Seal up your home.  The EPA estimates that homeowners can save an average of 11% on total energy costs by air sealing their homes and adding insulation in attics, floors over crawl spaces, and basements.

👉 Change your furnace filters regularly.  Your furnace or heating system is responsible for about half of your energy bill.  A clean filter costs about $20 and can lower energy use by as much as 15 percent according to the  Department of Energy.

👉 Cut down on the use of hot water.  Heating water makes up 12% of utility bills on average.  You can also cut down on water heating by washing many of your clothes in cold water.   About 80% of a washer’s energy is used to warm the water.

👉 Do an energy audit.  Many utility companies offer free energy audits, so you can take steps to increase energy efficiency in your home. Start by contacting your utility company or find an auditor near you. According to Energy.gov, an energy audit can show you ways to save 5 to 30 percent on your utility bills.

Have more ideas?  Join the discussion below. 

✨ TRENDING ON FINNY & BEYOND

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