A Simple Rule to Avoid Driving off a Debt Cliff

The best way to predict your future is to create it. Here are our latest ideas and info to help you get started.

You Should Know

• The Consumer Financial Protection Bureau is finalizing a new limit on how much credit card companies can charge in late fees, putting the cap at $8 (down from $32).

• Costco is now selling silver coins, and they are selling out fast. Each coin weights one troy ounce and is made of 99.99% pure silver. The coins are sold in tubes of 25, costing about $650. Costco quickly sold out of $2,000 gold bars in Oct. 2023.

• National Pi Day is March 14 (3.14). Plenty of pizzerias, bakeries, and stores have freebies and specials deals. Here’s a good list of deals.

A Simple Rule to Avoid Driving off a Debt Cliff

One of the quickest ways to destroy your wealth is to buy “too much” car. Say it with us: a car is not an investment. New cars will lose about 20% of their value in the first year, so it’s nuts to borrow a lot money for a set of wheels.

Americans are indeed paying way too much for that new car smell. The U.S. car loan default rate has hit a 30 year high, according to Fitch Ratings. Don’t expect someone to sit you down (especially the car dealer!) and figure out an honest car budget. Fortunately, there is a simple guideline that tells you how much car you can really afford - the 20/4/10 rule. Here’s how it works:

• 20% Down Payment: Make a down payment of at least 20% of the total car purchase price. A bigger down payment translates to a smaller car loan, which means less interest paid over the life of the loan.

• 4-Year Loan Term: Keep your car loan term to four years or less. Sure, the monthly payments will be higher, but you'll end up paying way less interest overall.

• 10% of Income on Total Costs: Your total car ownership cost shouldn't exceed 10% of your gross monthly income. Include factors like loan payments, insurance, gas, maintenance, that pine tree air freshener you hang on the rear-view mirror…

In summary, the 20/4/10 rule is your realistic car budget – don't go over it. If you want to buy a car for status and you can’t afford it, find other ways to bring up your status. Cars should get us quickly and safely from A to B, not drive us into a ditch of debt.

Ideas to Make Extra Cash

• Qwick helps people with free time find all kinds of shifts in the hospitality and bar/restaurant industries. You can choose the shifts that fit your schedule and skillset, such as working as a bartender, barista, event chef, line cook, restaurant server, and mixologist. You’ll get paid as fast as 30 min. after you clock out.

• PaidViewpoint is a no-nonsense paid survey site that pays out cash, not points or gift card rewards. Once you’ve been invited to a survey, they never screen you out without a cash reward.

• Pickle is a peer-to-peer clothing rental marketplace. You set the rental price for your wardrobe items and accept or decline offers that come in. Pickle provides a same-day door-to-door delivery service as well.

• BabyQuip connects parents traveling with young children (customers) with local providers who rent baby gear (Quality Providers or QPs). As a QP, you set your own rental fees for baby equipment (BabyQuip takes a ~20% commission). You can offer additional services like delivery and equipment set-up for an extra fee.

Amazing Apps That'll Change How You Use Your Phone

You’re not using your phone to its full potential. Here are some incredible apps that can transform your phone into a new tool:

• Yuka – scan the barcodes of food and personal care products and instantly see their impact on your health. The app also recommends similar but healthier alternatives.

• Tunity – hear any muted live TV channel. Just point the phone and the app will stream the TV audio through your headphones or speaker. Use at the gym, airport, or sports bars.

• 5-0 Radio Police Scanner – listen to live police, firefighter, aircraft, railroad, and ham radios. Be the first to know about crime updates, emergencies, weather, news, and more. Alternative app for Android devices here.

• Tape Measure – a free augmented reality app that lets users measure anything with their phone. It’s like having a virtual ruler in your pocket. Alternative app for Android devices here.

• Countdown – a free, super easy-to-use countdown timer for the important events and dates in your life. Never forget a birthday, anniversary, milestone, event, etc. Alternative app for Android devices here.

Want to Invest in SpaceX, Open AI, and Epic Gaming? A New ETF Will Let You

Pre-IPO companies like Space X and OpenAI are private businesses that haven't yet issued stock to the public. Traditionally, investing in promising pre-IPO tech companies has been an activity available to an exclusive club of professionals. Now, there is a new product that gives you access to that club – Destiny Tech100.

Destiny Tech100 (ticker: DXYZ) is the first-ever exchange traded fund (ETF) focused on pre-IPO companies, specifically targeting the top 100 venture-backed tech startups. This means anyone with a brokerage account can invest in these high-growth companies, regardless of wealth or experience/accreditation.

The fund invests in top venture-backed tech companies that have at least $50 million in investment by reputable US institutions. The current portfolio includes companies like SpaceX, Axiom Space, Epic Games, Brex, Stripe, OpenAI, Instacart, Discord, and Impossible Foods.

The company behind DXYZ is planning to list the ETF on the New York Stock Exchange this month (March 2024).

To be clear, DXYZ presents substantial risks to investors. Many of the high-flying tech startups that DXYZ holds could be overvalued. Also, you might be paying more than the underlying portfolio value when you buy shares, since DXYZ is a closed-end fund. Finally, fees charged by the fund will be high due to the complexity of the investments.

You can get a free share of DXYZ if you sign up for more info here.

This Mortgage Payment Trick Can Save You Bucket Loads of Money

Most homeowners who don’t fully own their home make mortgage payments on a monthly basis. There’s a way to pay off the loan faster, and as a result, save a ton of money on interest charges. Convert your monthly mortgage payments to biweekly payments.

Here’s the math - there are 52 weeks in a year. You will make 24 payments annually if you pay the mortgage twice monthly. However, if you pay every two weeks, you will make 26 payments annually. The biweekly payment schedule generates an additional full monthly payment per year, and that extra payment goes directly towards your principal balance.

The benefits of biweekly payments are clear – you build equity faster and avoid years of extra interest charges. Consider a 30-year fixed loan of $250,000 at a 5% interest rate. Biweekly payments would save a borrower about $30,000 in interest expense and have the loan paid off in five fewer years.

The beauty of the biweekly payment plan is that for most of the year, you won’t notice a difference to your monthly budget, because the two biweekly payments are roughly the same as the monthly payment.

Of course, check with your lender to see if you can pay off your mortgage every two weeks and if there is a prepayment penalty (there probably isn’t).