Plus: The benefits of having Nana as a roomie
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HerMoney Podcast Episode 338:
Inside the Mind of a Good Manager
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This Week in Your Wallet:
Does Inflation Have a Bright Side?  

Whether I’m taking questions from my InvestingFixx class or telling it straight to listeners on the HerMoney Podcast, there’s one question that keeps popping up again and again: When and where (and how) can I earn more interest on my cash?

The short answer is now, in money market mutual funds (and a couple other options), as described this week by The Wall Street Journal’s Jason Zweig. Because traditional savings accounts often earn mere pennies in interest (yes, still, they’re averaging .14% as of the week ending Sept. 28). That’s why money-market mutual funds are now a better choice for your liquid assets. At September’s end, there were more than 380 money-market funds yielding 2.5% or higher. Zweig also notes that placing some cash into US Treasury securities, in the form of I-bonds and US Treasury bills (aka T-bills), is another way to pump up the volume on the interest you earn. The yield on three-month US Treasuries increased by more than 3.25 percentage points already in 2022. If you’re looking to snag some I-bonds for yourself, check out TreasuryDirect. As Zweig notes: “TreasuryDirect charges no fees or commissions; most brokers don’t either on new-issue Treasury securities.”

Ready for the Rally

For those lamenting their stock portfolios right now — or at least hoping that yesterday’s rally was the start of something new — just know it could be worse. As it is now in the bond market. US Bond returns for 2022 are officially the worst ever recorded, notes the New York Times’ Jeff Sommer in his latest Strategies column. (If you’d like more of his no-nonsense, clear-headed insight, check out what he had to say on the HerMoney Podcast: The Market, The Economy, And A Recession.) Sommer offers calm in such a predictable way, he should have his own app. But we’ll take it! History tells us that a rally will find us eventually. Maybe not in 2023, but eventually. The market will rebound — not just for a day — and we’ll be in better shape than before. So, stay in the market, hang on to your strategy (or tweak it if it needs a revision) and wait it out. And although there are no guarantees in life, history is on our side for this one.  

Grand Apartments For Rent

If you or your recent grad are trying to figure out exactly how to navigate the spiraling costs of a life after college — which can include a thousand or more each month to put a roof over your head — the solution may be no further than over the river and through the woods, to grandmother’s house… Or, more precisely, to her guest room. There’s a movement afoot, often in areas where the cost of living is sky-high, where college-bound or recently graduated grandkids are moving in with older relatives to save on expenses for a few months, or even a few years. Joanne Kaufman of the New York Times explores the phenomenon known as “skipped-generation” households that’s bringing together families as they rekindle intergenerational connections — and save money as they look to battle the ever-climbing costs of inflation. (Kudos to former HerMoney reporter Becca for latching onto this trend early.) And moms and dads take heart if your child is considering moving in with a grandparent or great aunt or uncle — the living arrangements are often less fraught with the kind of tension that can occur when parents rule the roost. Personally, I think the free cooking lessons (from Nana) and tech support (from Gen Z) that will undoubtedly be swapped in this kind of set-up are worth their weight in gold.

How Inflation Might Actually Save You Money On Your Taxes

It’s no secret that we’re paying higher prices for nearly everything in 2022, with inflation near a 40-year high. That means that pair of new shoes, used cars and the ingredients for tonight’s dinner are going to set you back more than they did a few years ago — sometimes significantly so. But here’s one potential silver lining: Because parts of our complicated U.S. tax code are adjusted each year, experts predict this could mean a boost for the standard deduction and tax brackets, in an effort to control what’s called “bracket creep.” As Ann Carrns explains in the New York Times, “A single filer in 2021 who earned $100,000 and took the standard deduction would have paid $15,009 in taxes, for an effective tax rate of 15 percent. Under projected brackets for 2023, a taxpayer with the same income would pay $14,383 — a saving of $626 — for an effective rate of 14.4 percent.” The IRS typically announces adjustments in late fall, so we’ll keep you posted on updates there. For now, here’s one thing we know about 2023 that we’re already celebrating: You can contribute an additional $500 to your IRA, up to $6,500 (+$1,000 if you’re over 50.)

Having A Mortgage In Retirement: The Advice Has Changed

Should someone close to retirement strive to pay off their mortgage before they stop working? For years, the answer was a resounding yes. With interest rates rising, though, that advice is changing for some would-be retirees, writes Anne Tergesen in the Wall Street Journal. For those who have the cash on hand to pay off a mortgage, one strategy could be to invest those funds in low-risk (and short-term) Treasury notes. This would be particularly beneficial if the yield on the note would pay more interest than the savings on the interest rate of the mortgage. Check with your financial advisor or accountant to see what option may be best for you.

Student Loan Debt Forgiveness: A Reversal?

Finally, if you were counting on a chunk of your student loan debt being erased as part of President Biden’s sweeping loan forgiveness program, it’s time to take a step back and confirm exactly where you stand. Last week, The Department of Education (ED) changed course and announced that as of Sept. 29, 2022, borrowers with federal student loans not held by the ED wouldn’t be able to receive debt relief by consolidating those loans into direct loans.

Guidance on the official website says consolidation loans are eligible for relief, as long as all of the underlying loans that were consolidated were ED-held loans and were disbursed on or before June 30, 2022. Consolidation loans consisting of any Federal Family Education Loan (FFEL) or Perkins loans not held by the Department of Education were also eligible, as long as the borrower applied for consolidation before Sept. 29, 2022. We get it.

It’s murky and it’s complicated, and if you think your $10,000 may now be in jeopardy, it’s incredibly upsetting and disheartening. Start by getting all your paperwork in order and seeing exactly what kind of loans you have, and how they were consolidated. The official loan forgiveness application will be online within the next few days (the ED said “early October”) and we’re hoping that it’s clearly laid out and easy to understand for all loan holders.

Have a great week,


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