Top Ten Web-Based Money Management Tools

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Many of the best budgeting software tools are totally free. We list the top 10 options for paid and free apps. The #1 budgeting app is totally free.

Each decade brings new and innovative ways to manage your money. In the 1990s, you could use simple PC-based software to track basic income and expenses. These later evolved into reporting and analyzing powerhouses.

In the 2000s, connectivity with the internet made PC-based software easy to synchronize with bank and investment websites. The connectivity, in turn, provided access to detailed account information right at home.

With the arrival of the 2010s, the next phase is to manage the information that already resides out on the internet. We accomplished this through web-based software that will provide data security, keep the records protected against loss, and allow the user access their information from virtually anywhere.

Here’s a list of ten of the best web-based solutions for managing your money.

1. Empower

(Personal Capital is now Empower)

Emphasis: Tracking your wealth
Price: FREE!
Description: Empower offers a wide variety of tools that allow you to track your banking, investing and retirement accounts. Perhaps their greatest feature is the retirement planner, which can point you in the right direction to secure your future. Empower also has a great cash flow tool which you can use to track returns and dividends on your investments.

2. Wela

Emphasis: Online financial management + advice
Price: FREE!
Description: A lot of personal finance management software allows you to track your accounts.  Wela is a little bit different in that it actually provides you advice based on your financial situation.  Through an app, with a robot named Benjamin, Wela will look at your accounts and make suggestions.  “Perhaps you should be saving your money with Ally, which has a high interest rate” (for example).  Users can choose to listen or ignore the advice, but if you’re looking for actionable steps, look no further.

3. ClearCheckbook

Emphasis: Balancing your checkbook
Price: FREE!
Description: ClearCheckbook provides analysis tools for evaluating and tracking your expenditures. Your bank data is imported, and you can then analyze expenses by category and closely monitor your balance to avoid overdrafts. Uncleared and cleared balances are provided with alerts that can be set to any dollar amount.

4. MorningStar

Emphasis: Virtual portfolio tracking
Price: $18.95/month (or free)
Description: MorningStar offers a bunch of excellent premium content to paid subscribers. They also have a great portfolio tracker tool for the investor who sits at a computer all day. Quick glances at your portfolio will alert you to buying and selling opportunities.

Note from Nickel: Google Finance also offers a nice portfolio tracker, and it’s also free. I’m also not a fan of tracking my portfolio on a minute-by-minute basis, but… To each their own. Personally, I use the Vanguard portfolio tracker for a “big picture” view of our investments.

5. Buxfer

Emphasis: Tracking shared expenses
Price: FREE!
Description: Buxfer is great for people who share expenses with roommates. Instead of guessing at fair portions of bills and tracking things in your head, the software does the math and tracks who has paid for each of their expenses.

6. HelloWallet

Emphasis: Online financial management
Price: $8.95/month
Description: HelloWallet is a unique service in that, for every five users who sign up, an account is offered to a person who cannot afford this service. The site offers all the money management functionality necessary to manage and budget and monitor financial investments.

7. Mvelopes

Emphasis: Virtual envelope budgeting
Price: $129.60/year (equivalent to $10.80/month)
Description: Mvelopes is a virtual envelope-budgeting tool. When the bills must be paid, the dollar amount in each envelope is applied to the bill electronically. In other, budgeting and bill payment are combined into one handy tool. You can also track discretionary spending in a dedicated envelope.

8. Moneystrands

Emphasis: Manage cash flow and avoid surprises
Price: FREE!
Description: Moneystrands allows you to create a budget from the ground up, and then it monitors your performance. Alerts are provided automatically when the bank balance drops below a certain level. When bills must be paid, the user is alerted to the tasks that must be completed. They also have an iPhone app.

9. Mint

Emphasis: Complete financial management
Price: FREE!
Description: Mint can track virtually any financial activity. You can create a budget, track monthly expenses, evaluate investment performance, etc. This is by far the most well-known of all the web-based software packages. It’s so good, in fact, that Intuit bought it as a replacement for their own “Quicken Online.”

10. BudgetPulse

Emphasis: Budget planning
Price: FREE!
Description: If writing down a new monthly budget isn’t your thing, BudgetPulse can help to make it easier. Users can import and export their personal finance data, create graphs and charts for category spending, and bring in any financial statement. The primary downside to this easy to use software is that as of today, nothing syncs with your financial institution. The data needs to be input manually.

Do you track your finances online?

Even with the horror stories of website breaches and identity theft, my view is that the benefits of online personal financial management software far outweigh the risks. These services all work hard to protect your information, and some even allow anonymous signups. If you’re not already managing your money online, my advice is to test out a few of these sites and see if they meet your needs.

Empower Personal Wealth, LLC (“EPW”) compensates Webpals Systems S. C LTD for new leads. Webpals Systems S. C LTD is not an investment client of Personal Capital Advisors Corporation or Empower Advisory Group, LLC.

5 Alternatives to High Yield Online Savings Accounts

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Savings account interest rates have been plummeting. Here are five of the best alternatives to a savings account to make the most of your money.

alternatives to a savings account

Putting your money away in a high yield savings account is one of the smartest and safest moves you can make. The first $250,000 is insured per account holder and at 2% interest, the money will grow over time. The problem is that it’s been some time since online savings accounts yielded a rate north of 2%.

Here’s a sampling of current savings rates (as of August 2022)

  • TIAA Bank Yield Pledge Money Market – 1.05% – 1.25% APY (1.50% first year introductory APY is available for first-time Yield Pledge Money Market account holders on balances up to $250,000.)
  • Ally Bank Online Savings Account – 1.75% APY
  • Barclays Bank Online Savings Account – 3.80% APY
  • CIT Bank Online Savings Account – 2.00% APY

While rates have decreased quite a bit over the last six months, 1.70% is just not something to get excited about. This all begs the question of what you should do when your high-yield savings account no longer qualifies for the “high-yield” moniker. Assuming you don’t want to tie your money up indefinitely, your options are somewhat limited.

Let’s take a look at five alternatives to stashing money in a high yield savings account.

1. Look Toward Your Local Bank or Credit Union

Online banks typically offer significantly better rates than the average brick-and-mortar bank. You can, however, find some great deals by looking locally. Consider both local banks and credit unions, and also look into high yield checking accounts. You might have to jump through some hoops, such as signing up for direct deposit and/or using your debit card a minimum number of times per month, but there are still deals to be had.

When I moved to Connecticut, I was 40 miles from the closest Chase, Citi, or Bank of America. I had no choice but to open a savings and checking account with Citizens Bank. In addition to the convenience of having a brick-and-mortar bank just down the street, I also learned about the wide variety of products they offer. I was able to take out a home equity line of credit with the bank at a fantastic rate (with no closing costs). I was also able to open an 18-month CD at 1.75% APY, which I challenge you to find online.

2. Build a CD Ladder

Another possibility would be to put your money in CDs. If you won’t need access to the full amount at the drop of a hat, you can build a CD ladder. With a CD ladder, a portion of your savings will be available to you on a monthly, quarterly, or annual basis.

CD ladders are a simple concept. Instead of plunking your money away all in one long-term CD, you spread it out over the course of several years. For example, I put $5,000 into a 5-year CD this year. I do the same next year and so on so that I have five CD’s totaling $25,000. Then, every year after that, a CD matures, and I can either reinvest that money into another 5-year CD, or use it if needed.

  • Discover Bank (Member, FDIC) currently has some of the best online CD rates. Featured are their 1-year CD rate at 4.50%, and their 5-year CD rate and 10-year CD at 4.10%.

3. Purchase Series I Savings Bonds

While rates on Treasury securities have fallen dramatically since the Great Recession ended in June 2009, savings bonds from the U.S. Treasury are still very secure. For example, Series I Savings Bonds are currently paying a composite rate of 1.96%.

The rate is subject to change on a semi-annual basis because it is a composite rate that depends in part on the CPI-U, which is the value of the Consumer Price Index for urban consumers. The current rate is good until the end of October, at which point a new rate will be generated.

Every year, you have the ability to purchase up to $10,000 in I Bonds, and you can make your purchase online to the penny.  If you want a bond for $777.77, you go right ahead and do you. Keep in mind that I Bonds mature after 30 years.

4. Consider paying off debt

While you always need to maintain a cash cushion, there’s no point in earning a pittance on excess savings if you’re carrying debt. Instead of settling for 1 to 2 percent interest, why not throw some extra cash at your outstanding debts? Note that this breaks the liquidity rule, but it’s still worthwhile if you can swing it.

Most US families carry a variety of debt, all of which is going to be higher than the 1.30% APY you can get by putting your money in a high yield savings account. For example:

  • Home mortgage rates for even the most qualified of buyers is 3.25%
  • Credit card interest rates average 15% and can be as high as 27% for those with average credit
  • Auto loans can offer 0% for a short period of time, then increase to an average of 5%
  • Student loans can cost you between 4% and 11 % depending on whether they’re federal or private

Why have money sitting in a non-interest bearing account when you can take a bite out of your much higher-interest debt?

5. Invest in Loans with Lending Club

If you’re looking for a better return and don’t mind taking on a bit of risk, check out Lending Club. It’s not FDIC-insured, but returns have averaged between 5 and 8 percent historically. It is free to open an account, and you can get started with as little as $25.

Lending Club is a peer-to-peer network where you can invest in loans that are taking out by other users. Lending Club will rate the loans. The riskier the loan, the greater the return. They boast that 97% of all loans on their network yield positive returns, so choose your loans wisely.

Peer-to-peer lending is something that has taken off in recent years as banks have tightened their lending practices. For borrowers, places like Lending Club offer short-term notes for necessary cash flow. For investors, the opportunity to routinely clear 8-10% annually is a welcomed change to the savings account rates you see above.

Last but not least, you could always just choose to suck it up and deal with the low rates. While low rates are frustrating, you have to consider how much you’re actually losing by sitting on your hands. If you don’t currently have a lot of money in savings, then you’re not missing out on much in terms of real dollars. Your time might be better spent figuring out other ways to earn extra money or otherwise improve your financial situation.

If you have any other suggestions, please share them in the comments.

What Is Vesting and Why Should You Care?

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Vesting refers to the act of becoming fully entitled in an employer’s retirement fund, pension plan, stock options, or other related assets. The vested assets that you have can never be taken away from you. Money that has not vested, however, is lost when you leave the company. So it’s critical that you understand the difference.


Employers offer employees certain perks to incentivize them to remain loyal and deliver premium work. Giving employees non-forfeitable ownership of employer-sponsored retirement and pension assets is one of the main ways companies do this.

If your employer offers a pension plan, stock options, or matching contributions for a 401 (k) account, it’s important to pay attention to the vesting schedules for participating. Not paying attention to vesting means that you could forfeit the funds you’ve accrued if you leave a company before you reach key vesting milestones. Here’s a look at the three scenarios for vesting schedules.

Immediate Vesting

Some companies offer immediate vesting. This means that employer contributed funds are yours immediately. This also means you won’t have to worry about forfeiting the employer-matched portion of your funds when you leave a company.

Cliff Vesting

A company that uses cliff vesting transfers ownership of assets and matched contributions to employees once a specific period of employment has been reached. For instance, it may take a year before an employee is able to have full rights to their matched contributions.

Leaving before that one-year mark means  that you cannot keep any of the employer-matched funds. The federal government caps the amount of vesting time for 401(k) and 403 (b) accounts at three years.

Graded Vesting

Some companies release ownership of matched contributions to employees through multiple tiers. This is called graded vesting.

A company might, for example, release 20 percent of ownership to an employee in increments over the course of five years. This means any employee who leaves before the five-year mark will only receive whatever percentage has vested up until that point. The federal government caps the amount of vesting time for graded schedules at six years.

How Not to Leave Money on the Table

You probably already know that you should contribute the maximum amount to an employer-sponsored retirement or 401(k) plan. However, you risk losing the funds by timing your exit unwisely.

Knowing the specific vesting timeline of your employer is important. Especially, if you plan to switch careers or companies at some point. Leaving before you’ve hit a vesting benchmark could cause you to walk away from a nice chunk of retirement savings.

When does staying with a company just for the sake of becoming fully vested become worth it? It doesn’t make sense to stay put just for the sake of becoming fully vested. Especially if you’d like to pursue a better opportunity and vesting is years away. However, it’s a different story if you’re on year four of a five-year schedule and you’ve faithfully contributed to your employer-matched 401 (k) plan.

You should also know that vesting only involves the portion of funds your employer has contributed to your accounts. Any money you’ve chosen to contribute to an account like a 401(k) is yours, regardless of when you change employment. But it’s still worth doing the math if you’re considering leaving an employer before you’re fully vested.

Review of Republic Wireless

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Republic Wireless claims to offer excellent phones and service at rock bottom prices. In this Republic Wireless review, we put these claims to the test.

review of republic wireless

Mobile devices were supposed to free us from the tethers of landlines. Unfortunately, many wireless plans can leave us tethered to expensive contracts and oppressive terms. This is why contract-free mobile plans have become so popular in recent years.

One of the big stars of the contract-free world is Republic Wireless. Are you thinking of making the switch to this way of talking, texting and browsing?

Republic Wireless Coverage

The first step is determining whether you have coverage in your area. This link takes you to a tool that detects your location and determines your coverage. I tested it in Springfield, MO and had full coverage.

As the map below shows, Republic Wireless covers most of the U.S.

Republic Wireless Pricing

Republic Wireless’ pricing is a breath of fresh air compared to other carriers with complicated pricing layers. The entry price point is $15 per month for the company’s basic plan. How does Republic Wireless offer such low rates while still providing reliable service?

The service is unique because it actually defaults all phone usage to available Wi-Fi. If Wi-Fi isn’t available, it uses the Sprint and T-Mobile networks as backups. Here’s a quick rundown of the essential facts to know about Republic Wireless when comparison shopping:

  • All plans include unlimited talk, text, and Wi-Fi data
  • There’s no international calling
  • Monthly plans range in price from $15 to $45 (see below)
  • The carrier uses a unique Wi-Fi calling technology that switches between Wi-Fi and cell usage based on what’s optimal in any particular location
  • Customers can usually transfer their phone numbers to and from the provider easily

Republic Wireless Plans

Republic Wireless offers four plans:

  • $15/month: No cell data
  • $20/month: 1GB of cell data
  • $30/month: 3GB of cell data
  • $45/month: 4GB of cell data

It also offers other plans of up to 10 GB of data. It does not offer an unlimited data plan.

Republic Wireless App and Plan Switching

Republic Wireless offers a free app that tracks data usage every month. You have the option to instantly upgrade to a more expensive tier if you reach your data limit before the month is over. However, it will be your responsibility to switch back to the lower price tier at the end of the billing cycle to avoid the higher rate for the following month.

What We Like About Republic Wireless

Without question the low prices are the best feature. Compared to the big four carriers, Republic Wireless’ prices can’t be beat. We also like that you can switch back and forth between plans. This helps when you need a little extra data in one month, or a little extra cash in another.

What Could Be Better

This provider’s biggest strength also happens to be its biggest weakness for some customers. Republic Wireless is able to offer rock-bottom rates because it defaults each phone to Wi-Fi. This means you can’t automatically bring your own phone or transfer over a phone from another provider without first checking to see if your device is compatible.

Unlike most other commitment-free carriers, Republic Wireless does not sell refurbished phones. The company only sells new phones via its online store.

The absence of any type of family plan also detracts from the appeal of Republic Wireless a little bit. While this won’t concern you if you’re looking for a plan on your own, families looking for an easy and affordable way to divide usage between several people could be disappointed by a lack of options when signing up with Republic Wireless. However, you can manage several individual plans under one main account.

Is Republic Wireless a Good Fit?

Republic Wireless isn’t the best provider for super users. You’re really only getting a great deal if you opt to sign up for one of the bottom-tier plans that are available. The larger data plans that are available offer slightly less than what you can get with other contract-free options for what works out to be slightly more money per month.

Republic Wireless is a great option for a person who is a low data user. This would be someone who uses their phone primarily at home while connected to their own Wi-Fi network.

One thing to remember is that the coverage you experience with Republic Wireless could vary depending on where you’re located. This means that super users or people who are counting on their phones while on the road for business might be frustrated by the fact that they won’t be relying on one consistent network to access calls, texts, and data at all times.

The silver lining is that this is a commitment-free option that you can leave without facing any fees or penalties. The Republic Wireless 14-day guarantee makes it possible to end service and return your phone without penalty if it turns out that this ultimately isn’t the right option for you.

The Best Small Business Credit Cards of 2018

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Editor’s Note: Thank you for your interest, any offer(s) below might be expired and no longer available.

A terrific way to earn some extra cash when running a business is by using the right business credit card. Depending on how much your business spends, the potential savings could be thousands of dollars.

best small business credit cards of 2017

Small business credit cards are valuable when used properly. In addition to earning rewards, you can use them to track spending and manage employee cards. You can also earn a nice initial signing bonus. Below, you will find a list of the best small business credit cards available to you today.

Pay close attention to the details of each card. Try to match your spending habits to the card that will earn you the best rate of return.

Feel free to ask any questions you might have about business credit cards in the comments section. We are happy to help!

The Best Small Business Credit Cards

SimplyCash® Plus Business Credit Card from American Express – Earn a $200 statement credit after spending $5,000 in the first six months of owning the SimplyCash® Plus Business Credit Card from American Express. Earn another $200 if you spend an additional $10,000 in the first year. All together that means a $400 statement credit for spending $15,000. You earn 5% cash back at office supply stores and on wireless telephone service. You’ll also earn 3% cash back on a category of your choice and 1% cash back on all other purchases.

If you’re in need of a little interest free purchasing, this card gives you the first 9 months on the house. Once the 0% intro offer for 9 months expires, the standard APR applies. There is no annual fee to own the SimplyCash® Plus Business Credit Card from American Express, and if you need to spend a little bit over your credit card, American Express is happy to offer expanded buying power.

  • Biggest PRO – Pick from eight categories to earn 3% cash back
  • Biggest CON – Foreign transaction fees of 2.7% are charged. Keep this card in the United States!

Capital One Spark Cash for Business – Big cash back bonus alert! When you spend $4,500 in purchases during the first three months, the Capital One® Spark® Cash for Business will give you a $500 cash bonus. A no-nonsense small business credit card, you’ll earn 1.5% cash back on EVERY purchase. No categories, no tier levels, no expiration dates. The amount of cash back you can earn in a calendar year is unlimited and so long as the account is open, the cash rewards are available to you.

There is no foreign transaction fee to use the Capital One® Spark® Cash for Business abroad but there’s also no intro APR to speak of. One of the best perks to owning this card is that it charges no annual fee.

  • Biggest PRO – Huge $500 cash back bonus
  • Biggest CON – No bonus reward tiers or bonus rotating categories

Bank of America® Business Advantage Cash Rewards Mastercard® – After opening up a Bank of America® Business Advantage Cash Rewards Mastercard® and spending $500 in the first 60 days, you’ll earn a $200 statement credit. The two month time-frame is quick, but the $500 spend hurdle is the smallest on this list when it comes to initial bonuses. Bank of America is well known for their 3/2/1 cash back platform, and this business card is no different. Earn 3% cash back at the gas pump and at office supply stores, 2% cash back at restaurants, and 1% cash back on all other purchases. There is a $250,000 max spend limit on the 3% cash back tier (so you’ll earn 1% cash back after you’ve reached that amount in spending).

Two additional perks to mention for the Bank of America® Business Advantage Cash Rewards Mastercard®: There is a 0% introductory APR on purchases for the first nine billing cycles, and there is no annual fee.

  • Biggest PRO – 3% cash back on gas; largest rate on our list
  • Biggest CON – $200 initial cash back bonus; smallest on our list

Starwood Preferred Guest® Business Credit Card from American Express – The ongoing rewards program offers up to 5 Starpoints per dollar spent at SPG Hotels. You earn two Starpoints per dollar spent on participating Marriott Rewards hotels. You’ll also earn a single Starpoint on all other purchases.  New cardholders can earn 25,000 bonus Starpoints after spending $5,000 in the first three months of card ownership.

The Starwood Preferred Guest® Business Credit Card from American Express offers access to the Sheraton Club lounge for free, a 5,000 Starpoint transfer bonus (when you transfer 20,000 Starpoints to a participating frequent flyer program), and free on-site Wi-Fi. There is a $95 annual fee, but it’s waived for everyone the first year.

  • Biggest PRO – Up to 5 Starpoints on every dollar spent at SPG hotels
  • Biggest CON – $95 annual fee after the first year of $0

The Business Platinum® Card from American Express OPEN – Who wouldn’t love to start off with 80,000 Membership Rewards points? Well if you decide to own the Business Platinum® Card from American Express OPEN, that’s exactly what you can do. 80,000 bonus Membership Rewards Points are earned if you can spend $6,000 in the first six months.

The Business Platinum® Card from American Express OPEN’s main attraction comes from its travel rewards. Five points are earned for every dollar spent on flights and hotels when you book through American Express. You’ll also earn a 35% redemption bonus when you use your points to to pay for an airline fare and a 50% point bonus on all purchases over $5,000. You earn one point for every dollar spent otherwise.

Cardholders will also earn a $200 credit every year for baggage fees and other airline fees. The Business Platinum® Card from American Express OPEN also provides access to over 1,100 global airport lounges. Keep in mind that this is a charge card, so you must pay off your purchases every month and no interest is charged.

And the fee for all of these perks? A hefty $450 so make sure you’re taking full advantage of everything you see above.

  • Biggest PRO – 5x points on all travel purchases through American Express
  • Biggest CON – 1x points on all non-travel purchases under $5,000

Ink Business Cash® Credit Card – Earn $750 bonus cash back after you spend $6,000 on purchases in the first 3 months from account opening. In addition to a great up-front bonus, you’ll earn a great tiered cash back rewards program. 5% cash back on the first $25,000 spent annually at office supply stores and utilities. 2% cash back on the first $25,000 spent annually at gas stations and restaurants and 1% cash back on everything else.

An introductory 0% APR on purchases is also provided to new cardmembers with employee cards coming at no extra cost. After that the ongoing APR of 17.74%-23.74% Variable applies. The Ink Business Cash® Credit Card has no annual fee.

  • Biggest PRO – Fantastic bonus
  • Biggest CON –  Low 1% cash back that applies on most purchases

The Best Gas Credit Cards of 2018

This website receives compensation for products or services you obtain through the links on this site.

Editor’s Note: Thank you for your interest, any offer(s) below expired and are no longer available.

Don’t look now, but gas prices are slowly on the rise. Admittedly, the last few years have been really nice from a gas price perspective.  Most of the country is paying in the low $2 range for their gas. In some locations, we’re talking a buck ninety.

Low gas prices reduce the benefits of the best gas credit cards.  The lower cost of gas reduces your savings.  With prices inching their way back to the $3 range, a gas credit card is a crucial savings tool.   I work from home, rarely leave the house during the week and still save $50+ a year on gas purchases.

Below you’ll find a list we’ve compiled which feature the best gas credit cards available to you today.  Some favor heavy spenders, some light spenders. But they all qualify as having a great rewards program and terrific gas buying perks.

The Best Gas Credit Cards of 2018

Costco Anywhere Visa® Card by Citi – If you’re a member at Costco, then owning the Costco Anywhere Visa® Card by Citi is a necessity.  This credit card offers a whopping 4% cash back on gas purchases. It gives you 3% cash back at restaurants and on travel. You earn 2% cash back on all other purchases at Costco and 1% cash back everywhere else.  The 4% cash back offered on gas is good for the first $7,000 spent annually. If you spend more than that, the cash back rate becomes 1%.  At $2.50 per gallon, $7,000 spent breaks down to around 2,800 gallons.  For an individual, non-truck driver, it would be extremely difficult to pump that many gallons in one year.

New cardholders will also be provided a 0% intro APR on purchases for seven months.  The Costco Anywhere Visa® Card by Citi charges no annual fee but you MUST be a Costco card holder in order to gain approval.  This means keeping a paid Costco membership every year, which is a small price to pay for the rewards you see.

  • Biggest PRO – Great 4%/3%/2%/1% rewards program, no tier level or spend requirements
  • Biggest CON – No initial bonus

PenFed Platinum Rewards Visa Signature® Card – PenFed is not a credit card issuer you’ve likely heard of, but that doesn’t stop them from providing terrific rewards to it’s members.  The PenFed Platinum Rewards Visa Signature® Card gives cardholders 5 points per dollar spent on gas, 3 points per dollar spent on groceries and one point per dollar spent elsewhere.  They even rewards new cardholders with a $100 statement credit after spending $1,500 in the first 90 days.

The five points per dollar spent on gas is year round, no spend limits or rotating categories.  A 0% intro APR on balance transfers is also awarded (3% balance transfer fee) and there is no annual fee.  The one caveat to owning the PenFed Platinum Rewards Visa Signature® Card is that you must be a member of PenFed credit union.  That means being directly or indirectly involved in the Us Military or making a simple one time $17 donation.

  • Biggest PRO – 5 points per dollar rewarded on purchases at the pump, highest on our list
  • Biggest CON – Exclusive to PenFed credit union members only

Chase Freedom® – After applying and being approved for the Chase Freedom®, you’ll earn $150 in cash back after spending $500 in the first three months.  Get another $25 if you add an authorized user to your account when they make their first purchase.  Similar to the Discover it® Cashback Match™, cardholders will earn 5% cash back on select categories (including gas) each quarter and 1% cash back on everything else.  Discover and Chase typically try to avoid matching categories in a quarter, so owning these two cards likely covers you for 5% cash back in gas for six moths of the calendar year.

The Chase Freedom® also has a great 0% intro APR on purchases and balance transfers for 15 months, longest on our list.  There is no annual fee to own this gas rewards credit card.

  • Biggest PRO – 0% intro APR on purchases and balance transfers for 15 months
  • Biggest CON – 1% cash back rate when you can’t tap into 5% categories each quarter

Bank of America® Cash Rewards Credit Card – Bank of America has perhaps the most trusted brand in credit cards and their strongest rewards card is the Bank of America® Cash Rewards Credit Card.  New cardmembers will earn a $150 statement credit after spending $500 in purchases during the first 90 days.  You earn 3% cash back on gas and 2% cash back at the grocery store and at wholesale clubs. You net 1% cash back everywhere else.  On the 2% and 3% levels, a combined maximum of $2,500 per quarter can be spent.  When that amount is reached, 1% cash back kicks in.

When you redeem your cash back into a Bank of America checking or savings account, you get a 10% bonus (effectively making your rewards rate 3.3%/2.2%/1.1%).  Also included is a 0% intro APR on purchases and balance transfers for 12 months.  The finishing touch is that this card does not charge any annual fee.

  • Biggest PRO – 3.3% cash back rate on gas purchases for Bank of America checking/savings customers
  • Biggest CON – $2,500 spend maximum on all higher cash back categories

The offer below has expired.

Blue Cash Preferred® Card from American Express – This is my preferred gas card of choice, not only because it earns 3% on all gas purchases but also because new cardholders earn a $150 statement credit after spending $1,000 in three months.  The Blue Cash Preferred® Card from American Express also has a crazy 6% cash back on grocery buys (up to $6,000 annually spent). You earn 3% cash back at select department stores and 1% cash back on everything else.

As an added limited time bonus, the normal $95 annual fee is waived for all first year cardholders.  Tack on additional benefits like extended warranties, purchase protection (for items like laptops and cell phones) and travel accident insurance and the Blue Cash Preferred® Card from American Express qualifies as perhaps the best year round gas rewards credit card.

  • Biggest PRO – 6% cash back at the grocery store / 3% cash back at the pump.  Year round
  • Biggest CON – $95 annual fee after the first year

Discover it® Cashback Match™ – For the very first full year, you’ll earn double the cash back rewards with the Discover it® Cashback Match™.  The standard cash back rate is 5% on select categories each quarter (like restaurants, and on gas purchases). You earn 1% cash back on everything else.  In the first year, for one-quarter (three months) you can earn a whopping 10% cash back on your gasoline buys.  The maximum you can spend each quarter on the 5% cash back category is $1,500. After that, you’ll earn the 1% rate (or 2% if it’s your first year owning this card).

There is no annual fee to own the Discover it® Cashback Match™ and also included is a 0% intro APR on purchases for 14 months.  That will give you over a year to make purchases without having to worry about interest.

  • Biggest PRO – Double cash back for the first year which means 10% on gas for three months
  • Biggest CON – 1% cash back on gas purchases most of the year

7 Ways to Evaluate the Best Online Savings Accounts

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I’m a huge fan on online banking. In fact, I opened our first online savings account with ING Direct (now Capital One 360) over ten years ago, and I haven’t looked back since.

how to choose an online savings account

Sure, I still have a local brick and mortar bank for convenience, but I keep the vast majority of our savings online. Why? Because online banks offer significantly higher interest rates than do their local competitors.

I’ve opened more than my fair share of accounts over the years. In part it’s because I enjoy rate-chasing. And in part because I like reviewing them here on FiveCentNickel. With that in mind, I wanted to talk a bit about what I look for when evaluating an online bank. Here are seven main criteria I think about when deciding whether or not to open an online savings account. Depending on my current financial situation, I may weight them differently. (Interest rates current as of (04.09.2020)

Interest Rates

One of the biggest factors that I consider when evaluating an online bank is its interest rate. While online savings rates can fluctuate dramatically over time (just in the last few months, rates have increased substantially), certain banks are consistently among the best (or worst) of breed.

For example, Capital One 360 is typically among the first to lower their rates and the last to raise them when the interest rate landscape changes. Thus, while they’re quite popular, they’re not at the bleeding edge rate-wise. In contrast, banks like Synchrony Bank, Ally Bank, and CIT Bank have always stood at the top of the interest rate game.

  • CIT Bank – CIT Bank offers a wide variety of CDs, a MMA, home loans, and small business loans, as well. The minimum deposit to open a savings account is $100.

Try Lending Club – If you’re looking for a higher yield than a regular bank can offer and you don’t mind taking on some additional risk, you might want to check out Lending Club. It’s not FDIC-insured, but annual returns have averaged 9.05% APY over the past 18 months. It’s free to open an account, and you can get started with as little as $25.

Bank Safety

Whenever I evaluate a new bank, I always check out their safety ratings. To be completely honest, I’m not sure why I bother because, as long as they have FDIC insurance, I’m perfectly happy putting my money there. Case in point… I recently opened an account with DollarSavingsDirect. They have a 1-star Bankrate rating, but I’m still perfectly comfortable having money with them, as long as my balance stays below the FDIC insurance limits.

Perhaps more important than bank stability, especially for online banks, is security. The good news here is that most of the major online banks have fairly similar (and secure) login procedures, etc. Honestly, the biggest thing you can do to ensure the security of your money is to choose a strong password and then avoid falling for a phishing scheme.

  • Barclays – Barclays bank currently sports 3.80% APY. In addition savings and CD options, Barclays is also one of the premier credit card issuers in the United States. They offer cards great for travel, cash back, and balance transfers. Barclays currently offers an online savings account with no minimum opening deposit requirement.

Minimum Balance Requirements

Many online banks don’t have a minimum balance requirement, but some do. Fall below it, and your interest rate will likely tumble. You might also find yourself subject to monthly fees. If you’re not in a position to keep a large amount of cash in your account on an ongoing basis, be careful to choose one without a high minimum. WT Direct used to be an example of a bank with a relatively high balance requirement ($10,000 minimum).

  • Discover Bank – Discover Bank’s APY currently sits at 3.60%. Customers pay no monthly fees or minimum balance fees on the account, and it has no minimum opening deposit amount. For CDs, Discover Bank is one of the best, and I can attest to that first hand. I have a 10-year IRA CD opened up at 2.70% (when I signed up years ago) and today’s rate is 4.10%. Also, their customer service is top-notch.

Online Interface

I’m not terribly picky when it comes to bank interfaces. As long as the site is secure and functional, I’m pretty happy. That being said, some sites are certainly slicker than others. One of my favorites in this regard is an online savings account you may not have heard of. SmartyPig offers a clean interface with easy management. I’ve yet to encounter a single bug in its system.

  • SmartyPig – Here’s another place I have a savings account. SmartyPig offers 1.50% APY on balances of $25,000 or more (1.40% APY on smaller balances). Their interface is my favorite of any bank. I’ve set up an automated deposit feature where every two weeks, I’m making sure money is coming from my checking. SmartyPig also offers the ability for others to deposit into your account. Unfortunately, SmartyPig only offers an online savings account.

Other Account Types

If you want more than just a savings account, be sure to check what other account types your bank of choice offers, as well as your options for linking them together. For example, Capital One 360 offers an online checking account that that you can link directly to your savings account. Taking this a step further, EverBank offers checking, savings, and money market accounts, as well as a wide range of CDs that you can purchase in a wide range of currencies.

Another possible consideration is access to a brokerage account. Here again, Capital One 360 doesn’t disappoint, as you can link your account directly to a Capital One investing (previously ShareBuilder) account. Likewise, E*Trade offers both high-yield savings accounts and access to their brokerage accounts.

  • Capital One 360 – The current APY on the Capital One 360 Money Market Account is 1.50%. Let’s be honest … that pretty good. In addition to a high quality APY, Capital One 360 also has a lot of other account options. Online checking account, overdraft line of credit, money market account, and investment account are just some of the other ways you can be earning interest with Capital One (and their rates for those accounts are just as competitive).

Customer Service

Customer service is sort of a funny thing when it comes to online banking. If all goes well, you’ll never need to interact with a real, live person. But if something goes wrong, you’ll likely want to get someone on the line. While many banks have 24-hour customer service lines, some don’t. If this is important to you, be sure to check it out (and maybe call to test their hold times) before selecting a bank.

Another factor that I’ll lump in here with customer service is the time it takes to transfer money in and out of the bank. Some banks are quite good at this (like Ally Bank for example), consistently completing your transactions in two days, whereas others (HSBC Direct for example) drag their feet a bit and take a full three days. Not a huge deal, but it’s something to consider if you’ll be shuffling money around on a regular basis.

  • Ally Bank – When Ally Bank changed their brand (from GMAC bank), they put an emphasis on customer service. If you need to get a hold of them, they have an online chat feature available 24/7, plus email and phone support. Ally Bank’s online savings APY is 1.50%, and they’ve gone a bit outside the box with their CD offerings. If standard CD’s aren’t your thing, you can invest in a raise-your-rate CD or a no-penalty CD.

ATM Access

This one has never really been an issue for us, as we keep enough money in our local bank to avoid needing regular ATM access to our savings. Nonetheless, it’s an important consideration for some customers. Beyond asking whether or not your bank of choice offers an ATM card, you also need to consider fees. Some, such as CapitalOne 360, offer free ATM access via specific networks. But others do not. FNBO Direct also offers free access to a specific ATM network (Circle One), and both E-Trade and TIAA Bank reimburse you for ATM fees for any transactions outside their ATM network.

Closing Thoughts

As with most consumer decisions, selecting the best online savings account is all about trade-offs and finding a happy medium. What’s more important to you: interest rates or safety ratings? Online interface or minimum balance requirements? Every bank you see recommended above is a quality bank. Your money is always FDIC insured, and the interest rates are among the best anywhere.

Depending on your own personal needs, picking any one of them to put money away is a good decision.

How To Tell if a Credit Card Annual Fee is Worth It

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Editor’s Note: Thank you for your interest, any offer(s) below might be expired and no longer available.

The best credit cards often come with annual fees. From $59 to $450, these hefty fees can set you back a pretty penny. Here are six questions to ask to determine if a credit card annual fee is worth it.

credit card annual fee

Credit cards that come with annual fees usually dangle some pretty impressive perks in front of applicants. It can be easy to assume that perks like airline miles and cash back would justify annual fees. But that’s not always true.

It’s worth taking a step back to decide if paying an annual fee just for the privilege of owning a credit card is worth it. This usually requires tallying up how much you are paying for a card versus the cash value of the perks and bonuses you’re receiving.

Before you sign up for a card with an annual fee, here are six questions to consider.

Is a Free Credit Card Good Enough?

There are many great credit cards that don’t charge an annual fee. One of our favorites is the Citi® Double Cash Card. It pays 2% back on all purchases–1% on each purchase and another 1% when you pay for the purchase. It has no annual fee.

If a no-fee credit card gets the job done, there’s no reason to pay an annual fee. Several of the best credit cards have no annual fee.

How Much is the Annual Fee?

Annual fees vary from one card to the next. The Capital One® Venture® Rewards Credit Card, for example, charges an annual fee of $59. In contrast, the The Platinum Card® from American Express will set you back $550 a year. Before you can evaluate whether the fee is worth the cost, you need to know what it is. Check the terms and conditions of the card you are considering to determine the annual fee.

One thing to keep in mind is that many cards with an annual fee waive that fee for the first year of ownership. While this is a nice perk, it’s not a good enough reason to get the card. Still, it’s worth factoring it into the equation.

Will You Use Your Card for Everything?

Once you know the fee, it’s just a matter of math. You need to estimate how much you’ll charge to the card. For cash back cards, it’s easy to calculate the value of your rewards. For travel cards, it can get a bit more complicated (as we’ll see in a minute).

In addition to the rewards, you should also factor in other perks. For example, the Chase Sapphire Reserve offers a $300 annual travel credit. This credit covers more than half of the card’s $450 annual fee. Another common perk with airline cards is free checked luggage.

Once you know the value of the rewards, it’s time to do the math. Assuming a card’s rewards are worth 2%, you’ll need to spend $2,500 on the card for every $50 in fees to break even. And this doesn’t include extra perks as described above.

How Will You Use the Rewards?

Evaluating an annual fee with a cash back credit card is straightforward. It gets trickier with a travel card. With many travel cards, the value of the rewards depends on how you use them.

For example, the Chase Sapphire Reserve cards points are worth 50% more when you book travel through Chase. Thus, you need to determine how you’ll use these rewards in order to assess their value.

Will You Earn the Bonus?

The massive bonuses offered to new cardholders tempt a lot of people into signing up. Who could say no to the 60,000 bonus points offered by the Chase Sapphire Preferred® Card to cardholders who spend $4,000 within the first three months of owning the card? You have a lot to gain when you consider that the annual fee of $95 is waived for this card for the first year.

While you should consider a card’s signup bonus, keep a few things in mind. First, you have to meet a spending requirement within three to six months to qualify. Depending on the card and your spending patterns, this can be a tall order. Second, it’s a one-time bonus. I prefer to think long term when it comes to credit cards. Finally, an attractive bonus could be hiding other features of the card that are less appealing. A high interest rate comes to mind.

You can check out our list of credit card bonuses here.

Are You A Frequent Traveler?

People who travel frequently actually have some of the best reasons for paying annual fees for certain credit cards. In fact, it can be a foolish decision to skip a card with fees if you travel at least once a month for business or pleasure. You are almost certain to earn back your annual fee and get some free miles or other perks if you use your card for travel.

Credit cards that are co-branded with airlines actually go far beyond just giving bonus miles. They actually help you enjoy a luxurious, low-hassle experience whenever you fly. An option like the Gold Delta SkyMiles® Credit Card allows you to earn up to 40,000 bonus miles, a free checked bag on every flight, and priority boarding. The $99 annual fee for this card quickly starts to look like nothing when you factor in things like baggage fees and the hassles of boarding without priority status.

Do You Want to Transfer High Rate Balances?

Some credit cards offer 0% interest on purchases, balance transfers, or both. The balance transfer option is attractive if you have balances on cards with high interest rates. If that’s you, keep two things in mind.

First, the best balance transfer cards don’t charge an annual fee. These cards offer 0% for up to 21 months. There’s no reason to pay an annual fee if your goal is to transfer a balance to a 0% card.

Second, in most cases you do pay a separate balance transfer fee when you transfer a balance. The fee is typically 3%, although this varies. The point is that you don’t want to pay an annual fee on top of a balance transfer fee. If a balance transfer is your goal, check out these offers.

The Fine Art of ‘Reverse Budgeting’

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Budgeting is an incredibly popular topic among the financially savvy. And yet some of the most financially-savvy people I know don’t actually budget. With zero based budgeting, there’s no longer any excuse to avoid a budget.

zero based budgeting

When you think about a budget, what do you think of? You might think of having umpteen different categories to divide all of your expenses among. Each time you make a transaction, you have to decide which category to put that expense into. And then what happens if you over-spend in one category? You have to decide which other category that expense comes from.

This can get really complicated really quickly. In fact, you could wind up spending hours and hours each month just managing your budget. I, for one, don’t have time for that!

Instead, I use a practice I call reverse budgeting. It can also be called zero-based budgeting.

Here, we’ll talk about how this works for me, how it might work for you, and some tools you can use to make it work.

How Zero-Based Budgeting Works

You may have heard about this type of budgeting from financial guru Dave Ramsey. Except he uses it to describe this incredibly detailed, category-oriented budgeting system we talked about above. That’s one way to do zero-based budgeting, but it’s not the only option.

At its core, zero-based budgeting is actually about subtracting all your expenses, savings, and goals from your total monthly income and coming up with a difference of zero. There are actually several different ways to make this process work for you. Let’s talk about the options, and then figure out what might work best for your particular needs.

Option 1: Percentage-Based Budgeting

This is the option my family uses. Frankly, we have too much on our plates to spend loads of time examining every purchase. Instead, we devote a certain percentage of our income to savings goals each month, and then spend the rest. We can basically spend up to what we devote to spending, and no more, since we don’t do debt.

For instance, you could decide to devote 20 to 30 percent of your total monthly income to savings. You might split this between long-term goals, like saving for retirement, and shorter-term but necessary goals, like saving up to replace your vehicle. Then, maybe you’ll save 10 percent of your income to pay for one-off expenses, like getting your tires replaced or dealing with home repairs. Then you can spend the remaining 60 to 70 percent of your income on your daily needs and wants.

This is a very loose way to go about budgeting, but it works for a few reasons:

  • It’s easy to maintain. When you’re just shifting money around to savings accounts on payday and then keeping track of your balance, you don’t spend hours maintaining your budget. You can spend more or less in certain categories, as long as you don’t wind up going into debt.
  • You pay yourself first. One of the first principles of personal finance is to pay yourself first. This means you need to save before you start spending. This type of budget has aggressive savings goals, and you start saving right away.
  • You can use it to get out of debt. If you’re still working your way out of debt, this type of budget can still be helpful. You can, for instance, set aside a certain percentage of your income for savings, but then another percentage for extra debt payments. Outside of those categories, you can spend what you need to spend.
  • We’re still frugal. We could maybe save a few extra bucks a month if we more carefully tracked our budget down to the penny. But we’re still pretty frugal, especially since we have high savings goals. By putting a bunch of money into savings each month, we force ourselves to live on less. And as we’ve gotten pay increases over the years, we’ve been able to devote more and more to savings rather than falling prey to lifestyle inflation.
  • It’s easier for a variable income. If your base income varies or you have a side gig that brings in varying amounts of money each month, this is an easier option. Category-based budgeting can be tough when you don’t know exactly what your income will look like from month to month. With this option, you know that no matter what your income is, you save a certain percentage. And then you spend the rest. If your income is really variable, set up a system where you save extra in flush months to cover additional expenses in lean months. And consider lowering your savings percentage when your income for a particular month is really low.

With that said, this option isn’t for everyone. Some people need or want a much clearer picture of where their money goes every month. So here’s the other way to work a zero-based budget.

Option 2: Giving Every Dollar a Name

This is the budgeting option espoused by Dave Ramsey and his followers. And it’s not a bad way to budget. Basically, you start out the same way–with your total monthly income. But instead of just assigning a percentage to savings and the rest for spending, you detail your entire spending plan.

This means budgeting by category for things like your house payment, utilities, grocery spending, dining out spending, money for clothing, savings for holidays and birthdays, and more. You can get as broad or detailed as you want, though Ramsey’s budgeting templates are pretty detailed by category.

The goal here is to give every dollar a job before the month even starts. When you’re first starting out, you may find you need to move money from one category to another frequently. Over time, you’ll get more familiar with what you actually need to spend in each category on a monthly basis. But if you’re restricting your spending in this way, you shouldn’t ever need to spend more than you make.

Here’s what’s good about this more complicated budgeting option:

  • It lets you know exactly what you’re spending. A zero-based budget tries to be prescriptive. That is, it tries to tell you what you should be spending in each category. But at first, you might be off base. As you track your expenses carefully, you’ll know better what you’re already spending and where you need to make adjustments to live frugally.
  • It’s great for becoming debt free. If you’re dealing with a lot of debt–especially if that debt is due to your own over-spending–this may be the budgeting framework you need. Yes, it takes more time. But it also keeps you more closely in touch with your spending so that you can find ways to become debt free more quickly.
  • It helps with projections. A very detailed budget can help you know not only what you are spending now but what you’re likely to spend in the future. When you’re careful to plan for expenses that are a few months out, you’re less likely to be stuck without enough cash in hand to cover those expenses when the time comes.

Option 3: A Hybrid Approach

What if you know you over-spend in some areas but don’t want to spend an hour every week controlling your super-detailed budget? In this case, a hybrid approach may make sense for you.

In this approach, you’ll still devote a certain percentage of your monthly income towards savings and short-term goals. Then, you’ll set a couple of categories to track your spending money.

For instance, maybe you have a problem over-spending on your kids’ clothes because you just can’t resist a good sale at Old Navy or Children’s Place. You might seem frugal because you’re only shopping sales. But at the end of the day, the kids have too many clothes, and you’ve spent way too much on them. In this case, track spending on your kids’ clothes for a few months, and see when and where you need to cut back. Just the act of holding yourself accountable for that spending can help you cut back!

Or what if your problem area is spending on food? Track all of your food spending for three months. Then decide if it’s too much or if you can cut back. If you dine out a lot, just seeing how much you’re spending on those trips to the restaurant can help you decide to cut back.

This budget approach is great because:

  • It doesn’t take as much time as a detailed zero-based budget. You can spend just a few minutes a week totaling up spending in those chosen categories, and otherwise just spend what’s available to spend.
  • It can help you become more frugal. If you’re struggling with over-spending in just a few areas, this option can quickly help you get that spending in check. You may find that you suddenly have more money for things that are actually more important to you, or that you can pay down debt or save more quickly.

Tools to Get it Done

No matter which of these zero-based options you choose, there are some great tools to help you deal with your budget. Here are a few that work really well:

Free Bank Accounts

Yes, this counts as a tool! This is especially true if your spending plan involves moving money around on pay day. Say you’re trying to save 20 percent of your income. On payday, you should be transferring that much straight out of your checking account. When your accounts are free, it’s much easier to maintain this option.

The best online savings accounts can also help if you want to divvy up your short-term savings goals. Maybe some of the money is for an emergency fund, while the rest goes towards vacation savings. Having a different account for each can let you keep track, at a glance, of where you are on your savings goals.

And this can also work for the hybrid budgeting idea. Say you want to restrict your spending on the two categories we mentioned above: clothing and dining out. Set up a checking out for these expenses, specifically. On payday, transfer the percentage or dollar amount you want to spend on these categories to their own checking accounts. Then, you’ll be restricted in the amount you are able to spend unless you dip into your primary checking account.

Online Budgeting Programs

Online budgeting programs have come a long way since we originally published this article in 2008. Now, you can easily import transactions in programs like and YNAB. Sure, you have to spend a bit of time categorizing your transactions. But this is helpful if you’re doing a detailed budget or just tracking spending in a few categories.

Resource: Our list of the best budgeting tools


Want to go old-school? Use a spreadsheet to track your percentage of savings and spending over time. You can even create a chart to show you how your savings is growing, and how much money you’re spending month to month so that you can figure out if you need to cut back.

The point here is that zero-based budgeting is a great option for most budgeters. Whether you opt for a super detailed plan or a very loose one, this type of budgeting can help you make the most of every dollar and reach your financial goals.

5 Early Retirement Challenges You MUST Be Prepared For

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Early retirement is a dream for many. While saving enough to accomplish this goal is challenging, it’s just the beginning. Here are five challenges you must include in your early retirement planning.

early retirement planning

It seems as if everyone these days is planning for early retirement – or at least planning to plan for early retirement.

Saving and investing a lot of money is the obvious starting point. But there are also early retirement challenges that you must be prepared for. That part of the equation is just as important as building up a sizable retirement portfolio.

Here are five of those early retirement challenges, and how you can prepare for them.

1. Health Insurance – There’s No Medicare Before Age 65

You won’t be eligible for Medicare until you turn 65. And you’ll no longer be in a position to take advantage of an employer sponsored health insurance plan. As a result, you will almost certainly have to get a private plan on your state’s health insurance exchange. WARNING: It won’t be cheap!

Under the Affordable Care Act (ACA), health insurance companies can no longer charge you a higher premium if you have pre-existing health conditions. That’s the good news. But the bad news is that they are fully allowed to charge higher premiums based on age. And since you probably will be retiring around 50 or later, you can expect those age-adjusted premiums to be pretty ugly.

What’s more, you can also expect that they will faithfully increase each and every year. Yes, we know Washington promised us lower health insurance premiums. But unfortunately, that’s not what happened. Premiums have gone sky high.

You can get an estimate of what you are health insurance premiums will be by checking out’s Health Insurance Plans and Prices page. While it can tell you what your premiums will be at a future age, it can’t tell you how much those premiums will be by the time you finally do retire.

In order to keep the premium to a minimum, plan to have a high deductible. A $6,000 deductible and $6,500 out-of-pocket maximums are common. You can combine the high deductible plan with a Health Savings Account (HSA). With an HSA, you will have a tax-sheltered way to pay your co-pays and deductibles.

There is one possible silver lining here. Since you’ll be retired, and your income will likely be lower than what it is right now, you might actually qualify for an ACA subsidy. That will lower the cost of your premium at least a little bit.

2. Accessing Retirement Savings Before Reaching 59 ½

As you probably know, accessing your retirement savings before turning 59 ½ is tricky. If you do, you will not only be subject to ordinary income tax on the amount withdrawn, but also a 10% early withdrawal penalty. That means that your tax-sheltered retirement plans won’t be a good source of income in your early retirement years.

There are a few ways that you can get around this problem:

1. Have sufficient taxable investments to draw on during the early years of your retirement. You won’t get the benefit of tax deductibility of your contributions, nor of tax deferral on your investment income. But you will be exchanging those benefits for the ability to draw down those accounts without tax consequences early in your retirement.

2. Roth IRA. One of the biggest advantages of having a Roth IRA is that you can withdraw your contributions at any time, without having to pay either income tax or the 10% penalty. However, since your contributions are limited to $5,500 per year (or $6,500 if you are 50 or older), it’s not likely that you will be able to accumulate enough money in a Roth IRA to cover your early retirement years completely.

That being the case, you can instead set up a Roth IRA conversion ladder.

Using this strategy, you convert from your other retirement accounts an annual amount that is equal to how much you think you will need to live in early retirement, on an annual basis. For example, if you expect to need $40,000 per year in early retirement, you can convert $40,000 per year from existing retirement accounts into a Roth IRA.

Unfortunately, when you do a Roth IRA conversion, you will have to pay the 10% early withdrawal penalty if you take distributions from the plan in less than five years from the conversion. The point is to set up a series of conversions five years out, with enough conversions to cover each year of early retirement.

That will enable you to get distributions from your Roth IRA each year, while fully avoiding either ordinary income tax or any early withdrawal penalties.

You can live out of your Roth IRA during the early years of your retirement, and then begin accessing your regular retirement savings once you turn 59 ½.

We should add that there are other ways to take out money early. Here’s a good list of other alternatives.

3. Outliving Your Money

This is a concern of all retirees, but especially early retirees. If you are retiring around 50, you will need to have sufficient resources to enable you to live for several decades.

Probably the best strategy to deal with that is to apply the safe withdrawal rate to your retirement assets. If you withdraw no more than 4% of your retirement savings each year, you shouldn’t outlive your money.

Of course, that requires that you must have an average annual return on your investments that is significantly higher than 4%. Since the historic rate on stocks has been something approaching 10% since 1928, a mix of stocks and bonds in your retirement portfolio should get the job done.

For example, if you put 70% of your portfolio in stocks at an average annual return of 10%, and 30% in bonds at an average annual rate of return of 2%, your portfolio should average about 7.6% per year.

Given that inflation has been averaging right around 3% per year for the past 30 years, a return of 7.6% would allow you to withdraw 4% per year for living expenses and then retain 3% for inflation, and 0.6% for real growth.

Under that scenario, you would never outlive your money.

4. Inflation

Speaking of inflation, this is a serious problem for retirees of all ages. The income that you have today will not be sufficient in 10 or 20 years. You will have to invest for that likelihood.

Inflation has historically averaged just over 3% per year, though it has been lower in recent years.

The best way to deal with this problem is once again by using the safe withdrawal rate. You will leave some of your investment returns in your portfolio to cover inflation. But during times of particularly high inflation, you might also have to consider developing some additional income sources.

5. A Stock Market Crash

This is another of those big picture retirement scenario nightmares, much like inflation. Fortunately, stock market crashes tend to be short-term in nature. They often play out within two or three years, and then the market resumes its upturn.

The issue for retirees, however, is to minimize the damage to retirement savings from a stock market crash. Diversification – holding at least some of your portfolio in fixed income investments – is one way to do that.

But another, probably more effective way, is to have additional assets that can tide you over during bear markets. The idea is to leave your retirement portfolio alone while covering your living expenses out of non-retirement assets. This will at least help you to avoid selling portfolio assets at low prices.

In the end, none of these strategies will guarantee that you won’t have any challenges in early retirement. But they will minimize the impact of those challenges. And hopefully, they will enable you to stay retired throughout the rest of your life.