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Survey results: Will you miss a rent payment due to COVID-19?
Yesterday, we asked you if you anticipate missing a rent or mortgage payment in the next 3 months due to the economic fallout of COVID-19. ~2.5k of you answered our survey.
The Hustle’s readership skews higher-income than the median American household. A few stats on our respondents:
Average annual income = $113k (nat. avg. = $63k)
69% live in a house; 31% live in an apartment/condo
64% pay a mortgage; 36% pay rent
Average monthly rent/mortgage = $1,844 (nat. avg. = $1,465)
~12% are currently unemployed (nat. avg. = 47%)
Caveats aside, let’s take a look at a few findings.
First off, 8.3% of all respondents said they anticipate missing a rent payment in the next 3 months.
To put this figure in context: An apples-to-apples comparison is hard to come by, but one recent survey found 32% of US households had trouble making their housing payments for July. Renters struggled more than homeowners.
More from our findings:
A recent Pew poll found that lower-income Americans (making less than $25k/yr) are facing more food insecurity, and COVID-19-related feelings of depression and hopelessness, than Americans making $100k+/yr. Lower income Americans have also been hit harder by job losses.
Our results mirror that theme: Unemployed and lower-income respondents are up to 5x as likely to say they’ll miss a payment in the next 3 months.
With the extra $600 a week in unemployment benefits set to expire this month, these tensions will likely get worse.
Which industries are feeling the squeeze
Readers who work in fields that have seen fewer widespread layoffs (engineering, banking, management consulting) were far less likely to anticipate missing a rent check.
Workers in harder-hit sectors like hospitality and events don’t have the same optimism, especially with businesses shutting back down in some areas:
A fitness trainer in Irvine, California told us: “With gyms closing yet again in my county and the relief ending in a few weeks I will be totally screwed… At this point in time the unemployment plus the $600 is more than I can make at work without clients.”
A hair stylist in LA said: "Since reopening a few weeks ago here in Los Angeles, my freelance biz was going well so I have been renting a chair at a new shop, but now salons and barbers are closing again, and I cannot afford to pay rent where I live and where I work.”
If you need help
Many cities and states have limited landlords’ ability to remove tenants for late payments. The National Low Income Housing Association compiled a list of rental-assistance programs that are available around the country.
*Article courtesy of The Hustle Daily
Younger women are twice as likely to make their families’ financial decisions as in previous generations
Married women 45 and younger are twice as likely as older married women to make the financial decisions in their families, according to a new report from Merrill Lynch Wealth Management.
The report surveyed 4,000 women of all ages. It found that more women, regardless of martial status, are taking control of their money: 75% of women under 45 reported managing their money on their own, compared to 50% of women over 55.
The difference is partly due to women marrying at later ages than their parents’ generation, says Kirstin Hill, chief operating officer for Merrill Lynch Wealth Management. When they get married later, it’s common for both partners to continue to manage at least part of their finances and investments separately.
Women are also more educated than ever and are more often the primary breadwinners in their households. That adds to their confidence with handling money.
“Arguably, younger women are standing on the shoulders of generations of women before them and now seizing the opportunity to take control of their finances,” says Hill.
Younger women are also actively educating themselves on financial matters and are more comfortable talking about their finances with others, says Hill.
Another portion of the study measured unconscious bias in the financial advising industry. It found that while most advisors have “good intentions,” they are still more likely to assume that a woman does not have much investing knowledge (even if she is the decision maker in her family) or to assume that women are inherently risk averse, which is not always the case.
To demonstrate unconscious bias, Merrill Lynch researchers used live eye tracking technology to measure how long a financial advisor spent making eye contact with each partner in a heterosexual couple in the same meeting. It found that advisors, regardless of their gender, spent 60% of the meeting focusing on the male partner.
Women investors are aware of the bias, and they are more likely than men to do something about it: 35% of women said they would switch advisors after such an experience, compared to 30% of men.
This shows that women today are more comfortable taking control of their finances in ways past generations were not, Hill says.
“They are comfortable talking about money, they are comfortable making decisions about their money, they are comfortable asking questions and owning decisions around the advice they receive,” she says.
Going forward, she expects more women to take the reigns in financial decision making.
“That is momentum that can snowball, and I think that would be wonderful,” she says.
How much you’ll need to save per month to retire with $1 million on a $50,000 salary, broken down by age
Automatically saving a percentage of your salary can be one of the easiest ways to fund your retirement.
But figuring out how much your contributions will equal in the future can be confusing. If your plan is to get to $1 million, starting younger will go a long way toward keeping the process manageable.
As a rule of thumb, most financial advisors suggest you save 10% to 15% of your annual salary. Saving less is likely to leave you with regrets, while going too much higher than that can put a strain on your budget.
Personal finance website NerdWallet crunched the numbers, and we can tell you exactly how much of your $50,000 you’ll need to tuck away to get there.
Just a few things to remember: These numbers assume you have no money in your retirement plan, that you will get a 6% return on your investments and that you will retire at age 65.
The math also does not account for potential pay increases, employer matches, inflation or any curveballs life may throw at you. So plan accordingly.
Now let’s dive into the figures. Watch this video to find out how to make it happen.
Americans are more in debt than ever — experts say ‘money disorders’ may be to blame
The average American has $38,000 in debt — a quarter of which comes directly from credit card charges. In December 2018, consumer debt overall hit a record high $4 trillion.
Experts say a significant amount of this debt can be explained by what they call “money disorders.”
Brad Klontz, author of “Mind Over Money” and co-founder of the Financial Psychology Institute, says that money disorders is an umbrella term for recurring and self-defeating issues that people have with money.
According to Klontz, money disorders are often the result of underlying psychological issues like anxiety, depression or trauma. He says that treatment requires that people think about their behaviors and feelings toward money.
Klontz finds that most disorders fall into three broad categories: Money avoidance, money worshipping and relational money disorders. Each category can be broken into more specific disorders like overspending, workaholism and pathological gambling.
The COVID-19 Pandemic’s Financial Impact on U.S. Consume
*Article courtesy of TransUnion
COVID showed why we need to make financial literacy a national priority
As the COVID-19 pandemic continues to upend our lives, Americans are facing issues they couldn’t have imagined even months ago. What started as a health threat quickly morphed into something much bigger, not just impacting our physical well-being but also wreaking havoc on our financial health as well.
Tragically, those who were most vulnerable to begin with have been hit the hardest. Many in marginalized communities who were struggling before the pandemic are now bearing the brunt of the pain. And as our nation reckons with questions of social injustice, it’s clear that too many Americans have been left out and let down.
Our country’s lack of financial literacy has contributed to this crisis—and now, as so many Americans face unprecedented financial stress, we must make financial literacy a national priority.
Increasingly, Americans agree. In fact, two-thirds of Americans believe that financial education should be a high school graduation requirement. When our survey respondents reflect on their own lives, the majority wish that they had been better about saving, goal setting, and investing.
Looking beyond themselves, they overwhelmingly (89%) believe that a lack of financial education contributes to bigger social issues in America, including poverty, lack of job opportunities, and wealth inequality. When asked what they would teach future generations, the majority would still prioritize teaching personal finance basics, ranking responsible money management as the most important life skill for kids today to learn.
At the same time, there’s a common misconception that financial literacy is only for kids. And while it’s ideal to start educating our youth about money at an early age, the truth is that the learning can’t stop there. All of us, regardless of our age, race, ethnic background, gender, or educational level, need to know how to effectively manage our money. It’s part of being an independent and secure adult—whether you’re 21 and just starting out on your own, 30 and starting a family, or 65 and looking forward to retirement.
The need is especially great for women and minorities, who continue to face unique challenges at home and in the workplace. For the most vulnerable segments of our society, financial literacy can be a life-changer—impacting everything from getting a college education, to supporting a family, to following a chosen career, to starting a business. At the macro level, it can help bridge the wealth gap and support economic mobility.
On the positive side, in the last decade or so we have made progress. Currently 21 states require high school students to take a personal finance course. This is great for those students who take the courses, but it leaves out far too many.
Nonprofits have also stepped up to the plate; as just one example, Boys & Girls Clubs of America (BGCA) has engaged more than 1 million teens nationwide in its Money Matters personal finance program. In my decades of work with BGCA and as its incoming chair, I have witnessed the life-changing impact of Money Matters. Participants learn how to apply for college aid and complete the Free Application for Federal Student Aid (FAFSA) form, making them more likely to attend college, which improves their chances for economic mobility.
Completing the FAFSA unlocks federal grants, loans, and work-study opportunities, as well as many state and college scholarships, making college more accessible for many underserved students. Millions of eligible students who would have qualified for Federal Pell Grants fail to file the FAFSA.
Financial literacy has been shown to increase both student applications for financial aid and the use of lower-cost private loans, while simultaneously decreasing the use of higher-cost private loans and credit cards. Smart financial decisions when it comes to borrowing can help students graduate with less debt.
These are steps in the right direction, but Americans want—and deserve—more, both for themselves and for future generations. That’s why we need to make financial education a requirement in all 50 states, and we need more support for teachers who provide it.
We need more employers to provide financial education to their workforce, including topics beyond retirement preparedness. Employees should have the opportunity to learn smart strategies for saving, managing credit and debt, and protecting themselves through insurance.
We need our government leaders and Congress to prioritize this issue and provide the leadership and long-term commitment to address it. And because it’s equally needed across party lines, financial literacy can be an issue where lawmakers can work together to improve our individual and collective financial security and freedom. Regulations and protections are important, but not enough.
And in our own homes, we need to gather around the kitchen table and have more open conversations about money and how it can be a tool to achieve what matters most to us.
As I look beyond the pandemic, I see financial literacy as an essential pillar in a changed world. When we emerge from this crisis, the world may look different in fundamental ways. But as two-thirds of Americans recognize, financial literacy is the foundation that will allow all of us, and in particular those who have suffered the most, to make the decisions that will support a healthy and financially secure future.
*Article courtesy of Fortune
Harvard psychologist: The toxic money mindset that even millionaires have—and how to break out of it
I’ve surveyed thousands of adults around the world — from the financially affluent to the middle-class to the poor — about two very simple, universally valuable resources: Time and money.
Unsurprisingly, most people focus too much on working and making money, and not enough on having more time. But shifting your mindset to prioritize time over money can have several benefits.
Studies show that those with a time-centric mindset have:
Higher levels of happiness: People gain half as much happiness from valuing time more than money as they would from being married. This boost holds across demographics: It’s not explained by how much they make, their educational background, the number of kids they have or their marital status.
Better social connections: Focusing on time encourages us to put our social relationships first. Even fleeting social interactions (e.g., chatting with that person you always see on the bus) can play a significant role in reducing time stress and increasing happiness.
Healthier relationships: Time-focused people have happier spouses than money-focused people. For example, couples who spend money on time-saving services (e.g., paying for a house cleaner) to have more quality time together derive more happiness from their relationships.
Greater job satisfaction: People who value time work the same number of hours as people who value money. Ironically, they also often make more income than those who worship money, because they’re more likely to pursue careers they love. In turn, they are less stressed, more productive and creative, and less likely to quit.
The pitfalls of chasing money
Focusing on chasing wealth is a trap, because it leads only to an increased focus on chasing wealth.
Nothing less than our health and happiness depends on reversing the innate notion that time is money.
Research shows that after we make enough money to pay our bills and save for the future, making more does little for our happiness.
If anything, once people start making a lot of money, they begin to think they’re doing worse in life, because they become obsessed with comparing themselves to those who are richer.
Even multimillionaires make the mistake of believing that money, and not time, will enrich their lives.
My colleagues surveyed a few thousand of the world’s wealthiest people, asking how much they’d need to be “perfectly happy.” Seventy-five percent (many of whom had a net worth of $10 million or more) said they’d need “a lot more” ($5 million to $10 million, “at the very least”) to be happy.
It doesn’t take a PhD in psychology to see how misguided this mindset is.
How to start prioritizing time
Parts of our brain drive us to choose vice over virtue. (Anyone who wants to lose weight will tell you how much they struggle: Sugar is bad but alluring. Exercise is good but hard to instigate.)
However, there are ways to start seeing time as the more critical currency that it is — and the resource that, more than any other, determines our happiness:
Convince yourself that time is at least as important as money.
Remind yourself of your values when faced with critical decisions.
Make deliberate and strategic decisions that allow you to have more time across days, weeks months, and years.
Implementing each of these steps depends on two activities that will become part of your time-affluent life:
Reflection to create self-awareness about what you’re doing and why you’re doing it. This seems easy: It’s only thinking. But as any behavioral scientist can tell you, humans are capable of twisting our thinking into Escherian stairwells to avoid uncomfortable or hard-to-accept truths. Your reflection must be intentional and honest.
Documentation to create a record of your hopes, observations, calculations and plans for time affluence. Plenty of research confirms the efficacy of writing things down, and it’s essential here because of the forces conspiring to make you focus on cash.
Nothing less than our health and happiness depends on reversing the innate notion that time is money. It’s not. Money is time.
Ashley Whillans is a behavioral scientist and assistant professor in the Negotiation, Organizations & Markets Unit at Harvard Business School. Her research is centered around how people navigate trade-offs between time and money. Her work has been published in The New York Times, The Wall Street Journal, and The Washington Post. Ashley is also the author of “Time Smart: How to Reclaim Your Time & Live a Happier Life.”
FICO Updates and Their Impact on Credit Scores
Changes in how Fair Isaac calculates credit scores will create a bigger gap between people deemed to be good and bad credit risks.
FICO is rolling out new versions of its credit score this summer, FICO Score 10 and FICO Score 10 T. According to the Wall Street Journal, those with high scores already will likely get an even better score with the new system, while those with low scores could see theirs drop even further.
Let's explore how FICO determines credit scores and what the changes may mean.
*Article courtesy of wealthmanagement.com
Latinas earn $0.55 for every dollar paid to White men, a pay gap that has barely moved in 30 years
Changes in how Fair Isaac calculates credit scores will create a bigger gap between people deemed to be good and bad credit risks.
This year, Latina Equal Pay Day falls on Oct. 29, marking how far into the new year Latinas have to work to earn the same pay white, non-Hispanic men earned the previous year.
When translated into a dollar amount, Latinas today earn, on average, just $0.55 for every dollar earned by White men, leaving them with a pay gap that surpasses that of women in all other racial groups. Over the course of a 40-year career, it’s estimated that Latinas stand to lose $1,163,920 due to the wage gap, according to data from the National Women’s Law Center (NWLC). Assuming that a Latina and her White male counterpart both start working at age 20, NWLC estimates that due to this wage gap a Latina will have to work until she’s 92 to earn what her While male peer earned by 60.
The ongoing pay disparity that Latinas face is one that has barely budged within the last 30 years, according to NWLC. In 1989, Latinas were paid just $0.52 for every dollar paid to White men. This means, that the Latina pay gap has only narrowed by a penny every decade since.
Adult Hispanic woman CEO in a conference meeting room alone.
“I think there’s a lot of performative wokeness happening,” Jasmine Tucker, NWLC’s director of research, tells CNBC Make It about the Latina pay gap and why it’s barely improved over the last 30 years. “I think people are saying they care about this issue, but they’re not actually taking steps to address this issue.”
She says that while more companies are publishing reports to try and prove that they pay people in the same job fairly, it’s important to examine who these companies are hiring and what positions they’re hiring certain people for.
“I feel like there’s a lot of gaming the system in that way,” Tucker adds. ”[Companies] are like, ‘Oh well, we’re paying them the minimum wage. We’re paying them a living wage.’” But, she says, “when you’re doing the bare minimum, and then you’re also faster promoting White men into C-suite positions” then you’re not really making progress.
Today, for every 100 men promoted to manager, just 71 Latinas are promoted at the same rate, according to Lean In and McKinsey & Company’s 2020 “Women in the Workplace” report. The study describes this inequity as “the broken rung,” in which Latinas face barriers around sexism and racism that often block them from being promoted to manager.
Tucker explains that the longstanding pay disparities Latinas face have only been exacerbated by the Covid-19 crisis, with nearly three in 10 Latinas working a front-line job today, but still being underpaid for their work.
For example, Latinas make up just 7% of the overall workforce, but they account for 22% of child-care workers. On average, Latinas working full-time, year-round in child care earn just $0.88 for every dollar earned by White men in the same occupation, according to NWLC. Similarly, Latinas working as cashiers and retail salespeople earn just $0.76 for every dollar paid to a White man in the same role and Latinas working as janitors, maids and housekeepers earn just $0.61 for every dollar paid to a White man in the same role.
“We’re depending on their labor like never before, but we’re not paying them what we owe them,” says Tucker, while adding that many of the jobs Latinas are overrepresented in are also jobs that have experienced major layoffs during the pandemic. In September, nearly one in nine Latinas were unemployed. But Tucker argues that this number is likely higher when you account for the thousands of women who’ve been forced to leave the labor force because of the overwhelming demands to work, teach and parent at the same time.
“I think there’s really a lot of suffering happening here because Latinas were already struggling to make ends meet before this crisis,” Tucker says. She adds that “if they had the [financial] cushion that some of their White male peers had,” then they would be in a much better position to weather the storms of today’s economy.
To ensure that Latinas aren’t left behind as economic recovery begins, Tucker says it’s important that the government focuses on access to affordable child care so that Latinas, and women overall, aren’t forced to leave the labor force. Additionally, she says, with the ongoing pay imbalance it’s critical that Latinas, especially those in low-wage jobs, join unions. Though less than 11% of the workforce belongs to unions, NWLC data shows that the overall gender wage gap for union members is 53% smaller than the wage gap for non-union members.
“We have to shift back to where workers can start to get some power and they can bargain together,” Tucker says. “I think that’s just such a huge important resource that workers should have and we’ve seen how the wage gap is smaller.”
*Article courtesy of cnbc