What is Beneficial Ownership and How it Affects Your Accounts

View Resource What is Beneficial Ownership and How it Affects Your Accounts
Often for small to medium businesses and even some larger businesses, it is not economical to have your own merchant account and be a merchant service provider. That’s why third-party payment processors are a great solution – instead of having a merchant account which comes with high set up costs, a business will work with a third party who has their own relationship with a merchant services provider. Third party payment processors frequently offer their clients payment services via the Automated Clearing House (ACH) network, which is convenient, but also comes with its own set of rules and requirements to avoid fraud and other problems. For businesses and other third-party senders who process ACH transactions, there are a number of security requirements required by NACHA (National Automated Clearinghouse Association). These rules apply to any business that processes ACH transactions in either direction, whether to pay employees or vendors or to accept payments. Most business owners either have an ACH merchant account to process ACH transactions or use a third-party system to process ACH transactions. Businesses that use third-party vendors need to maintain a level of security to make sure the process goes through accurately and sensitive ACH data stays protected. The business itself is responsible for the security of the data and must put access controls, including data encryption and firewalls, in place to safeguard sensitive information. Third party venders process on behalf of their different clients and use their deposit accounts to conduct the payment process. From the business owner’s perspective, the ACH rules require any transmission of banking information, such as a customer’s bank account and routing number, be encrypted using “commercially reasonable” encryption technology if transmitted via an unsecured network, like the Internet. Regular email or insecure web forms are not an acceptable way to send personal and sensitive information. So if you use a third-party software solution for transmitting ACH, ensure that the company you choose has the most up-to-date encryption available. From the bank perspective, businesses that use third-party vendors also have to comply with the security procedures outlined by NACHA. To maintain security and assure validity of the items on ACH files, these procedures should be followed: – The business is responsible for security of sending ACH items to the bank, and the bank is responsible for the security of processing and transmitting the ACH item to the Federal Reserve. – When the ACH files are received by the bank, they are processed exactly as they are received. Dates cannot be modified after the receipt of files. – If a file has been processed by the bank, the bank will reverse files or entries only after receiving a Reversal Request through Business Online Banking from any two authorized users that have the authority. – If the file has not been processed by the bank, the bank will delete the entire file after receiving a written, signed request from any two authorized signers. The bank will verify that the person signing the request is authorized to do so. – When a business submits transactions through Business Online Banking, this will be considered a valid transaction by the bank – no additional verification will be performed. This is the main reason that only granting Business Online Banking access to necessary people is so important. – The business is responsible for establishing the Business Online Banking access IDs and passwords. Only employees responsible for ACH transmissions should have access to this information. – The business is responsible for ensuring that passwords are secure by changing them on a regular basis, especially in the event of an employee termination. – The business is responsible for notifying the bank if unauthorized personnel may have gained access to the Business Online Banking platform. – Both the business and the bank agree that all telephone conversations, emails, and data transmissions are secure and are only shared with the necessary people, but they may also be electronically recorded and retained by either party. If your company processes ACH transactions, make sure to stay on top of all the latest rules and procedures as established by NACHA. Visit their website for the most up-to-date information.

Keep Your ACH Transactions Compliant with NACHA Requirements

View Resource Keep Your ACH Transactions Compliant with NACHA Requirements
It can be very exhilarating when you are about to rent your first apartment. However, it can also be a little overwhelming since the process is unfamiliar. Before you start looking and applying for apartments, heed the following tips to make the process go a bit smoother. They can help you land the perfect place for your needs and wants. Preparing Your Finances Landlords can check your credit score, and most do. They can also deny you the rental if your credit is not particularly strong. However, you might be able to make the landlord a little more confident in renting to you by offering a second deposit or a couple of month’s rent up front. Regardless of whether you have good credit, no credit or poor credit, you are still going to need a good chunk of money up front before you can move in. Landlords typically ask for the first and last month’s rent as well as a security deposit (usually equivalent to one month’s rent). If you are a good tenant, do not cause any damage to the apartment and do not break your lease, you usually get your security deposit back. However, in the beginning, before moving in expect to fork out some cash. If the apartment rents for $1,200 a month and the landlord wants first, last and a security deposit, plan on paying out $3,600 before you even step foot in the door. So, you will want to start saving money now. Another thing to consider is renter’s insurance. Some places require it. Even if they do not, it is not a bad idea to get coverage to protect your belongings in case of a break-in or damage to your things. It does not cost that much for renter’s insurance either (possibly around $10 to $20 a month). When you take out a renter’s insurance policy, the insurance provider might ask you to provide proof of the belongings you are looking to cover. Receipts (if possible) and photos should be good enough. Art pieces and jewelry might require additional coverage. Place all documents in a fireproof safe in your apartment or a safe deposit box at your bank. Setting a Budget Experts suggest that you do not spend more than 30 percent of your gross income on rent. If you cannot afford a place, then do not sign a lease, even if they are having a promotion. To set up a realistic budget to live in an apartment, subtract all reoccurring and major expenses from your after-tax income. What is left is what you have to pay for rent. Remember, this total should include not only your monthly rent but also utilities if the lease does not include them. Signing the Lease It is crucial that you know what your responsibilities are as a tenant, so you should carefully and thoroughly read your lease agreement. Each state may have different laws, but some clauses could be illegal which would invalidate the whole lease. You should know what these are in case you end up having issues with your landlord. There could also be other legal clauses, that are easy to violate, like a no-smoking clause. You would not want to get evicted or fined because you had a guest who lit a cigarette on the front porch. So, be super careful to know the ground rules so that you can stay in the apartment. There is one simple rule when it comes to an apartment rental: The first applicant who typically qualifies for the apartment usually gets it. So, in a tight housing market, you will want to have your application information with you so you can complete the application and hand it in right there on the spot. For the first-time renter, this means you should have your necessary information with you and any written references you can provide to the landlord. Pay stubs and bank statements are also good to have to prove you can afford to pay the rent each month. Having a savings account with enough money saved to pay rent for an emergency like losing your job will help too. Takeaway Your first apartment is a big deal, and while it is exciting to be moving into a place of your own for the first time, this is the time when you will need to start acting like a grown up. You will have many responsibilities now, but fortunately, it’s easier than you may think.

Qualifying for Your First Apartment

View Resource Qualifying for Your First Apartment
Economic uncertainty remains despite an economy that has been growing in recent years. The massive recession that created such turmoil in the world’s economy and left many people struggling to make ends meet here in the U.S. is still far too fresh in the minds of many families to fully enjoy the current economy. Fears of an uncertain future have many savvy people looking for ways to boost rainy day funds should the good times end. There are two primary ways you can make yourself less vulnerable to the many factors that made the last economic downturn so devastating:
  1. Get your finances in order.

  2. Make yourself immensely employable.
Preparing Your Finances This step is the most complicated part of the process for many who live in a decidedly consumer-driven society. However, preparing your finances for rainy days, weeks, months, and years can make a world of difference when economic downturns occur by allowing you to weather the storm without losing your home or your security. These steps help. Making these changes a process that requires time, patience, and dedication to accomplish. However, taking the time to do so can yield tremendous results and create a more favorable financial situation for the next recession or retirement – whichever comes first. Exploring Employment Options One of the most significant problems people faced during the previous recession was one of employability. With so many companies letting experienced players in various fields go or laying them off, the job market became flooded with highly qualified candidates in every industry. There are some things you can do, now, though, that will help you have a competitive edge if and when another recession occurs. The more diverse your new experiences, knowledge, and skills happen to be, the more impactful the edge they give you in a flooded marketplace. Doing these things to protect your finances and your employability might not help you from feeling the sting of another recession, but they will undoubtedly help numb its sting.

Preparing for an Economic Downturn

View Resource Preparing for an Economic Downturn
An irregular income presents unique challenges when it comes to budgeting. However, it does not effectively make budgeting impossible. When done correctly, developing a reasonable budget for your irregular income can help you eliminate debt-related stress, live within your financial means, and save for those rainy days. Use the information below to create a budget that can prepare you for the future and help you achieve your financial dreams, whether they be large or small. Understanding Your Income When you have irregular income, it is more important than ever to understand the ebbs and flows of how your income operates. That includes understanding the economic seasons, and how they relate to the peaks and valleys of your income. When business is peaking, your income is most likely at its highest. However, it also means you need to understand and handle times when your income reaches its low point during an economic valley. For example, roofing contractors often experience a significant boom in business during the warmer months of late spring, summer, and early autumn. However, winter work may be limited to emergency patchwork when the weather permits. You have another unique challenge to overcome in that you can not work on rainy days either. So, you need to take the seasonality of your business into account when budgeting so that you have enough money to cover primary expenses during the slow season. The same philosophy holds true in many other industries as well, including: Whether your work is seasonal in nature or you have unreliable hours, it is still vital to establish a budget and live within it. Calculating Required Spending Your first step is to understand your necessary monthly expenses. For this, it helps, if they are available, to go on budget payment plans for utilities. Under these plans, you will pay a consistent amount each month. You might pay more than your seasonal use calls for some months, but having a consistent cash flow will make it easier for you to manage your expenses each month. The key is that you need to know exactly how much money you must spend each month on essentials that include: These are the essentials that you and your family require for economic survival. Once you know this amount, you have the first set of building blocks for a workable budget. Calculate Discretionary Spending The second part of the calculation is to understand your discretionary spending each month. These are the luxuries in life that are not essential, though you may believe they are necessary. The thing to remember about these expenses is that unless they relate to your income somehow (as in you may need a phone or access to the Internet for your work), you can live without them for a month or two if necessary. They include the following: Sometimes, it is eye-opening to see just how much you spend each month on discretionary items. Identifying these purchases can help you see areas where you can make changes to your budget that can net huge savings – especially during leaner months. While you do not want to eliminate all discretionary spending, you can set limits so that there is money left over for luxuries even in the leaner months. The Importance of Saving Saving is critical for people who have irregular incomes. That is what allows you to get through the leaner months, so you do not have to worry about how you will make your house payment or feed your family. If you are currently struggling, the first place to look for savings opportunities is in your discretionary spending. Cutting the cord with the cable company can easily save you $100 a month depending on your current package. Instead, you can borrow DVDs from the library to entertain yourself and may never miss your cable service. Further cuts to your budget may involve switching from mobile phone contract plans to monthly prepaid services and overcoming the urge to upgrade every time a shiny new phone hits the market. Budgeting is critical when you are working with an irregular income. It can help you avoid drowning in credit card debt while helping you achieve your short and long-term financial goals.

Budgeting on Irregular Income

View Resource Budgeting on Irregular Income
It is something many families dream of: Owning a small cottage by the lake, a cabin in the mountains, or a beach bungalow they can visit on long weekends, during holidays, or for extended summer vacations. When the time comes to turn that dream into reality, there are a few things you should take time to consider seriously. Famed economic advisor, Dave Ramsey, recommends taking a step back before you decide to buy and ask a few critical questions about your financial situation. These include: Ramsey cautions against taking out a mortgage or dipping into retirement savings to pay for a second home. Doing so could turn your vacation home into a much more significant investment than your budget can handle. Affording a Vacation Home If you must finance a vacation home, it is better to have a much higher down payment going into the house. Consider investing at least 20 – 30 percent of the home’s cost as a down payment to qualify for a loan on the home. Even then, you will likely find that interest rates for vacation homes are higher than for your primary residence. The best option is to pay for your vacation home up front. In high-demand areas, the costs of paying cash can be prohibitive. Another opportunity to consider is purchasing the property as an investment property. Then, you can hire a property management agency to rent the property out when you are not using it to help defray the costs of your investment. In some cases, rental income can make up the difference in the cost, allowing you to recoup your investment quickly and pay as little interest on the loan as possible. That is one case where financing your vacation home may be an attractive option. Just remember that you are responsible for the condition of, maintenance of, and repairs to the property when you have renters. You will also have to work out a schedule that works for you concerning when you will use your vacation home and when it will be available for rent. Cost of Vacation Home Ownership The costs of ownership go well beyond the costs of buying a vacation home. In addition to the usual expenses related to buying a home (mortgage, insurance, etc.) there are additional expenses you must consider as well, such as: Since you are paying for these things for two homes, you are essentially doubling your expenses. Also, it’s important to note that since the vacation home is not your primary residence and remains unoccupied for extended periods, it may require specialized insurance that costs a little more than your average homeowner’s policy. Failing to get the right kind of coverage may open you up to denial of coverage when disaster strikes. Rent or Buy a Vacation Home? Depending on how you plan to use your vacation home, and how often, it might be a better investment to rent a vacation home rather than to purchase one. Renting a home for one or two weeks in the summer is much more cost effective than paying all these expenses on a house you are only likely to use a few times each year. Plus, you can use your vacation dollars to enjoy a change of scenery, rather than going to the same place year after year. If you are only planning a couple of weeks or extended weekends each year in your vacation home, renting is the better financial choice for the average consumer. That is, of course, unless you are viewing this as a potential investment. If you are planning to spend an entire summer or several weeks throughout the year in your vacation home, on the other hand, it might be worth considering purchasing the home. Buying a vacation home is a long-term investment in your happiness and that of your family. It’s also a massive financial undertaking. Make sure you understand the full scale of that purchase before you commit.

Buying a Vacation Home

View Resource Buying a Vacation Home
Dating presents an opportunity to get to know another person more intimately to determine whether he or she could someday become a life partner. Until you have made that decision, however, dating allows you to get to know the other person more deeply to learn whether or not you are compatible on many levels. That includes financial compatibility. While some people are reluctant to discuss essential things like money, money management, and financial goals while dating, it is more critical than many couples, in the early stages of a relationship, realize. First things first, though, it is time to address the elephant in the room when it comes to dating — financial etiquette. Financial Etiquette for Dates In the 1950s, 60s, 70s, and even to a lesser degree, the 1980s the guy was expected to pay when couples went on dates. That was the expectation because so few women had jobs and careers. Moreover, women who did work often earned considerably lower wages than the men they were dating. The times have changed. More women are pursuing professional careers, and many have earnings that outpace the men they are dating. Also, the new rules of financial etiquette for dating are somewhat different too. In a March 2018 CNBC article on dating etiquette, Emily Post of the “The Emily Post Institute” is quoted: “We believe it is the person who does the asking who should do the paying,” says Post. “Or at least who should be prepared to offer to pay.” They should also be open to the idea of splitting the cost of the date, “if the person asked on the date offers that up as an option.” With that said, the general expectation is still that the man is often still expected to pay — at least for the first date. The real problem is that expectations and wishes differ from person to person and couple to couple. Some people even prefer to split the bill on that critical first date or opt for a less expensive coffee or drinks rather than going out for dinner and to a movie type that tends to be more costly. That leaves opportunities for discussion about future dates and who will pay and also allows both parties to determine if they even want to consider additional outings with the other person. The first and second dates, though, are not generally the problem. It is the later dates when you begin to explore the possibility of a long-term relationship with a person when more in-depth conversations about money and money management need to take place. Starting the Conversation About Money Money: It can be one of those uncomfortable topics to discuss when dating. Unfortunately, dating someone who is your financial opposite could lead to long-term relationship hardships and a non-happy ending for both of you when all is said and done. The more serious the relationship becomes the more difficult it becomes to extricate yourself, and the more painful. Determining early on whether you are financially compatible can help you decide if this is the person for you. While it’s just a date today, it could quickly turn into something deeper and romantic for both of you. Understanding a potential partner’s experiences with money, ideas on spending money, and financial goals can go a long way toward deciding if this might be “the one” for you. Start with a simple question about debt. It might not be a comfortable conversation, but it can help you gauge the approach of the other person. For instance, student loan debt is a good segue into a much broader discussion about debt, managing debt, and paying an outstanding balance off as quickly as possible. You can even start the conversation with a statement about your student loan debt and how you are managing before asking your date about his or her experiences and opinions. Dealing with Financial Issues The best way to deal with financial issues is with open and honest communication. At some point, you must sit down together and have the financial reveal where you discuss your financial situations, income, expenses, and approach to managing debt, saving, and spending. When you get to the stage of combining finances, if it ever comes to that, you need to have clear expectations and understandings going into the relationship to save you both from severe emotional and financial pain. No rule says you have to have your finances entirely under control before beginning a relationship. Many people are just starting to learn their financial tendencies while dating. It is essential, though, to find some common ground upon which you can build long-term financial goals together if you wish to continue in your relationship.

The Financial Side of Dating

View Resource The Financial Side of Dating
Leasing a car is a great way to continue driving a new vehicle with the latest comfort, safety, and connectivity features. However, you have to be smart when you are leasing a car. It’s a more complicated transaction than merely buying a vehicle. It is too simple to make costly mistakes. Here are just a few easy-to-make and avoidable car leasing mistakes. Understanding How Leasing Works When leasing a car, be sure to read the fine print before you sign that contract. While a car lease typically offers lower monthly payments, it can be extremely costly when you are not sure what you are doing. With leasing, you are theoretically only paying for the depreciation that occurs over your lease term, plus fees and interest. So while this sounds simple enough, it can be far more complicated in practice. If you have never done this before, leasing can be a bit tricky. When you purchase a new car, you need to pay (whether by cash or loan) the total price of that car. When you lease a vehicle, however, you are only paying the difference between the cost of the vehicle and its expected value once your lease is up, plus fees and interest. So, if you want to lease a car that is $40,000 and it’s expected value after three years is $30,000, you will only need to pay the expected depreciation — $10,000, plus fees and interest. If you were to purchase this same car, you would have to pay the entire $40,000, plus additional charges and interest. When your lease is up, you return the car to the leasing dealer. You might or might not have some lease-end costs which depend on the amount of security deposit you put down when you signed the lease. At this point, you will have the option to either: Keep this in mind; a lease is a contract you typically cannot easily break without having to pay some potentially significant penalties. When you buy a car, you can sell it at any time without penalty. That typically cannot be done with a leased car. Negotiating the Deal Many individuals believe the sticker or lease price of a car is what determines the lease price. Typically, this is not the case unless you are taking advantage of a subsidized lease deal through the manufacturer. When leasing a car, you definitely can negotiate the best price, and you should. In leasing terminology, the term ‘capitalized cost’ refers to the purchase price of the vehicle. If you can negotiate a lower capitalized cost, you can reduce your upfront payment, monthly payments or both. You can also negotiate other things like the: Other Factors Other things you need to factor in when leasing a car are: Deciding to lease a car rather than buy one is the perfect way to be able to drive a newer car while paying less money each month. Just remember the leasing risks that could have you paying more in the long run, defeating the purpose of leasing. Keep the above factors in mind, and read the fine print of your lease contract before you sign to ensure you lease a car that is right for you and within your budget.

Avoid These Car Leasing Mistakes

View Resource Avoid These Car Leasing Mistakes
It is possible to pinch pennies without anyone being the wiser. We live in a world where people are continually judging everything they see us do or buy when we are out and about. That does not mean you have to allow your financial goals to get out of hand. You can be frugal in the way you spend money without being viewed as cheap. Ways to Be Frugal Being frugal is a great thing. It can help you cut costs, boost savings, and meet various long and short-term financial goals you set along the way. These are a few tactics you can use to lead a more frugal lifestyle.
  1. Rethink your bills. Contact your cable company to seek ways to cut your monthly cable bill. Alternatively, cut the cord completely and switch to less expensive streaming alternatives.

  2. Kick cellular contracts to the curb. Many people find they can cut monthly costs immensely by skipping the expensive cellular contract services and opting for prepaid cellular services instead.

  3. Shop in consignment shops. Whether buying clothing for kids who grow a mile a minute or shopping for yourself, consignment shops offer opportunities to buy high-end items for a fraction of the costs. Favorite items to buy second-hand include furniture (choose shops that vet their items well), clothing, handbags, and video games for kids.

  4. Buy used vehicles. Purchasing a certified pre-owned vehicle can help you save a huge amount of money over purchasing new without giving up essentials like factory warranties and other perks that come with owning a newer vehicle.

  5. Shop wisely. Saving big money on major purchases is possible. For instance, make major electronics purchases after the Consumer Electronics Show which takes place each January. You will likely see significant price drops on existing technologies so retailers can make room for new items that are coming soon. The same holds with Christmas decorations. The best time to buy a tree is after Christmas when they all go on sale.

  6. Invest in quality. Believe it or not, you sometimes save more by paying more. Buying cheap items sometimes mean you must repeat the purchase far too frequently rather than investing in a quality product that is built to last.
Now that you know a few tactics to follow for more frugal living, it’s time to explore the transition from frugal to cheap and things you can do to avoid making it. Signs that You Are Being Cheap It’s great to be frugal, but no one wants to hear accusations of being cheap. If any of the following apply to you, you may want to dial your frugality back a notch or two.
  1. You are willing to drive out of your way, or even across town, to save a few pennies on gasoline or a grocery item. If you do not have the proper balance between the value of your time and the value your money, you might be crossing the line.

  2. You are constantly asking for add-ons and “freebies” from both retailers, friends, and families. Your brother-in-law might know his way around electrical wiring, but if you are constantly asking him to hang a new ceiling fan, or install a new electrical outlet, without offering in-kind assistance on projects he might have around the house, you might be getting too cheap. Likewise, if your idea of a great dinner date is to cruise your local warehouse club for free food samples, well, you get the idea.

  3. You are the person that conveniently forgets their wallet when the restaurant bill comes due, or when dividing up a bill, you have to itemize every item that members of your party ordered so that you don’t pay a nickel more than you ordered. Oh, and then you conveniently forget to include a tip for your waitstaff.
When your attempts to live frugally begin to take over your life and prevent you from doing most everything you love, it is time to rethink your strategy. Being frugal is supposed to help you live better, not force you to stop living. Using the tips above for frugal living will help you save without making saving an obsession where it becomes a detriment to leading a happy life.

Staying Frugal without Becoming Cheap

View Resource Staying Frugal without Becoming Cheap
In today’s ever-increasingly disposable society, it is not always easy to know what items you might want to try repairing instead of just replacing it. More importantly, the rules seem to vary from one type of thing to the next. It can all be so confusing. This guide offers a variety of tips and tactics to help you decide when it is best to buy another item or if you would be better served to repair your existing products instead. Repairing items offers a few distinct advantages worth considering, such as: Of course, there are advantages when it comes to replacing items that are worth considering as well, such as: As you can see, under the right circumstances, the arguments for either can be compelling. This guide hopes to help you understand the right conditions for replacing or repairing your broken things. Repair or Replace Rules of Thumb Before you dive too deep into the rules of thumb for repairing vs. replacing your treasured possessions, there is one unaddressed factor with these calculations. That is the sentimental factor. There are some things where the cost of repair is not a factor because the possession has worth to you beyond its financial value. Barring that truth, these rules of thumb will help you make wiser financial decisions when making decisions about repairing or replacing items in your home or garage. Automobiles: Repair or Replace For cars, there are many mitigating factors to help you decide if it is best to repair or replace. One of the most important, being the costs of repairing the vehicle vs. replacing it. Some people view a car repair as a one-time investment that will keep the car on the road, at a minimum, for another year or two. That compares favorably to taking on another car loan and having higher insurance rates and fees that might go along with a newer vehicle. However, sometimes the car is old enough that the repairs keep on coming. When that occurs, you have to weigh the long-term costs of repairing, loss of use, and overall inconvenience with the costs of replacing your vehicle. With vehicles, the question almost always comes down to a matter of math. Appliances: Repair or Replace In May 2017, The Washington Post offered a handy guide that helped determine at which age you might wish to consider replacing certain household appliances rather than repairing them. Some suggestions it offers include repairing until items approach the ends of their expected life spans which look something like this: Appliances that have not yet reached these ages may not be ready for a replacement, though the costs of repairing them may give you second thoughts. If that is the case, make the best financial decision for your current situation. Other Considerations to Keep in Mind There are more things to consider beyond bringing in a professional to repair your broken things. There are some things you may be able to repair yourself. Especially in light of all the amazing instructional videos that are available online to help with the simplest and most complex tasks. Factors to consider if you are thinking about repairing items yourself include the following: For instance, drafty doors and windows can be repaired more easily than replaced but doing nothing can cost you in the form of higher energy bills. The better you understand your options, the more informed decisions you can make when the time comes to consider repairing or replacing your possessions.

Repair or Replace it?

View Resource Repair or Replace it?