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Budgeting 101 How to Budget Money

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Budgeting 101 How to budget money

Divide your earnings between savings, needs, and debt repayments, using the 50/30/20 budget.

By Bev O'Shea personal finance writer | MSN Money, Credit.com, Atlanta Journal-Constitution, Orlando Sentinel Bev O'Shea is a former NerdWallet authority on consumer credit, scams and identity theft. She has a bachelor's degree in journalistic studies from Auburn University and a master's in education from Georgia State University. Before coming to NerdWallet she worked for newspaper publishers, including daily ones, MSN Money and Credit.com. Her work has been featured in The New York Times, The Washington Post, the Los Angeles Times, MarketWatch, USA Today, MSN Money and other publications. Twitter: @BeverlyOShea.

and Lauren Schwahn Lead Writer | Personal financial, credit Lauren Schwahn is a writer at NerdWallet who covers budgeting, debt and money-saving strategies. She is a contributor to the "Millennial Money" column in The Associated Press. Her work has also been highlighted in USA Today, MarketWatch and other publications. Lauren holds a bachelor's education in the field of history at The University of California, Santa Cruz. She is located within San Francisco.

Updated Dec. 2, 2022

Edited by Kirsten VerHaar, the Senior Assigning Editor eBay and Yahoo! Kirsten VerHaar is an editor for personal finance. She holds an English literature degree from the University of Colorado Boulder. In the past, she was a lead editor at eBay and was in charge of a team of writers who created coverage for the company's global content team. She has also written for Yahoo. Since she joined NerdWallet since 2015 she's covered topics as wide-ranging as vacuum cleaners (yes it really is) budgeting, as well as Black Friday.

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If I'm able to make about $2,000 per month, how do pay for food, housing, insurance, health care as well as debt repayment without running out of money? This is a huge amount to pay for with a limited amount, and this is a zero sum game.

The solution is to create an budget.

The term "budget" refers to a way to plan to make the most of every dollar you own. It's not magic however it does provide financial security and a lifestyle without stress. This is how you can set up and then control your budget.

How do you budget your money?

Determine your monthly income select a budgeting approach and track your improvement.

You can try the 50/30/20 principle for an easy .

Up half of your income for needs.

Reserve 30percent of the earnings for things you want.

You should commit 20% of your income to savings and debt repayment.

Track and check-ins regularly.

Learn about the budgeting process

Determine your tax-free income after taxes If you earn regular pay, the amount you receive is probably it, but if you have automatic deductions for such things as a 401(k), savings as well as life and health insurance, you can add them back in to give yourself a true image of your savings and expenses. If you earn other kinds of income -- perhaps you earn money through side gigs -- remove anything that decreases the amount, like taxes and business expenses.

Select a budgeting strategy: Any budget must cover all of your needs, certain desires and -- this is key -- savings for emergencies and the future. examples include the envelope system as well as Zero-based budgets.

Track your progress: Record your spending or use .

Automate your savings: Automate as much as you can so that the money you've set aside for an exact purpose can be used with little exertion on your behalf. A partner in accountability or an online support group can help to hold you accountable for decisions that go against the budget.

Manage your budget: Your spending habits budget will evolve in time, so you must actively control your budget by reviewing it often, perhaps every quarter. If you're having difficulty sticking with your plan, try these tips .

Before you begin to create a budget

NerdWallet breaks down your spending and helps you figure out ways to save.

Frequently asked questions

How can you create a budget spreadsheet?

Begin by determining your take-home (net) income, and then take a pulse on your spending. In the end, you should apply the 50/30/20 principle: 50% for needs, 30% toward desires, and 20% for saving and repayment of debt.

How do you manage a budget?

The most important thing to do is keep your budget is to do it on a regular basis so you'll have an accurate picture of the direction your money is heading and the direction you'd like it be instead. Here's how to get started:

1. Check your account statements and classify your expenses.

2. Keep your tracking consistent.

3. Identify room for change. A free budget can help you budget more easily.

How do you calculate your budget?

Start with a financial self-assessment. Once you know where you are and what you'd like to achieve, choose a strategy which is a good fit for you. We recommend the 50/30/20 system that divides your earnings into three main categories 50% of your income is allocated to needs 30 percent goes to wants and 20% goes to savings and debt repayment.

Try a simple budgeting plan

We suggest the popular 50/30/20 budget to . It is a budget that allows you to spend about 50% of your after-tax dollars for necessities, not more than 30% on needs, and at least 20% on savings and debt repayment.

We appreciate the simplicity of this strategy. Over the long term those who follow these guidelines will be able to manage debt, room to indulge at times and savings to pay for irregular or unexpected costs and to retire with ease.

The 50/30/20 budget

Find out how this method of budgeting applies to your budget.

Monthly after-tax income Include your take-home earnings and include back any deductions made from your paycheck for health insurance, 401(k) contribution and any other savings accounts that automatically save you money.

Your 50/30/20 numbers:

Necessities $0

Wants to pay nothing

Savings and debt repayment $0 Do you know your "want" areas?

Track your monthly spending trends to determine your needs and wants.

You can set aside up to 50% of your income for needs

Your requirements -- roughly 50 percent of your income after tax -- should comprise:

Groceries.

Housing.

Basic utilities.

Transportation.

Insurance.

Minimum loan payments. Anything beyond the minimum goes into the savings and debt repayment category.

Child care or other expenses that you will need to cover in order to get back to work.

If your absolute necessities exceed the mark of 50 You may have to dip to the "wants" portion in your spending plan for a few days. It's not an end-of-the-world scenario, but you'll have to alter your budget.

Even if you're under the 50% cap, revisiting these fixed expenses occasionally is smart. You might find an opportunity to or an possibility to . This leaves you with more options to do with other.

Leave at least 30% of your earnings to be used for needs

It can be a challenge. However, in general, the needs you require are vital to live and work. Common needs include dining out as well as gifts, travel, and entertainment.

It's sometimes difficult to make a decision. Are spa-related restorative visits (including ) something you want or a requirement? What about organic grocery items? Individuals' choices differ from person.

If you're looking to eliminate debt as quickly possible, you may decide that your desires can be put off until you've saved or you have your financial obligations in control. But your budget shouldn't be tight that you'll never spend money just to have fun.

Every budget should have room for flexibility -- perhaps you've forgotten about the cost or it was higher than you thought -- or you have some cash to spend as you wish. If there's no money to spend on enjoyment, you'll be less likely to stick with your budget.

You should commit 20% of your earnings to savings and debt repayment

Make use of 20 percent of your earnings after tax to put something away to cover the unexpected, or save for the future and repay debt. Make sure you think of the bigger financial picture; this could mean that you have to switch between savings and debt repayment to accomplish your most pressing objectives.

Priority No. 1 is an emergency starter fund.

A lot of experts suggest you attempt to accumulate a few months of bare-bones living expenses. We recommend starting with an of at least $500 -- enough to cover minor emergencies as well as repairs, and then increase your budget from there.

You won't be able to pay off debt without knowing how to not incur more debt each when something unexpected happens. It's also easier to sleep in the knowledge that you have an insurance policy for your finances.

Priority No. 2 is to get the employer match to the 401(k).

First, you need to get the money that is easy. For the majority of people, this means tax-advantaged accounts such as the 401(k). If your employer provides matches, you must contribute at least enough to reach the maximum. It's free money.

Why is it that we give securing the employer match as a higher priority over debts? Because you'll never get another chance like this one to get free money, tax breaks and compound interest. In the end, you'll will have better chances of creating wealth by getting into the habit of regular long-term savings.

There's no second chance to make the . Every $1,000 you don't put aside when you're in your 20s, it could mean more than you've got .

Priority No. 3 is a toxic debt.

If you've found a match on the 401(k) If it's you have it, take on the toxic debt in your life such as high-interest credit card debt, individual and payday loans, title loans and rent-to-own payments. All carry interest rates such that you'll end up repaying more than three times the amount you borrowed.

If one of the following situations applies to you, consider options for , which can include bankruptcy or

It's impossible to pay off your unsecured debt -- credit cards, medical bills and personal loans -- within the next five years, even when you make severe spending cuts.

Your total unsecured debt equals half (or more) of income.

Priority No. 4 is, as always, saving to retire.

After you've eliminated all debts that are toxic Next step is to get you on the right path to retirement. Make sure you reduce your expenses by 15% on your total income, including the company match if there is one.

If you're young, think about after you capture the match from your employer. When you've reached the limit of contributions to the IRA, return to your 401(k) and increase your contribution there.

Priority No. 5 is, once again your emergency fund.

Regular contributions can help you accumulate 3 to 6 months' cost of living expenses. Don't expect a steady progression since emergencies can occur and this is the time to withdraw funds from this account. Focus on replacing the items you are using and increasing your use over time.

Priority No. 6 is repayment of debt.

They are above the minimum requirement to .

If you've already cleared your most toxic debt then what's left are lower-cost, taxes-deductible loans (such such as the mortgage). Consider these to be dealt with when the primary goals mentioned above are accomplished.

Any flexibility you may have here is derived from the funds to be used for needs or the savings you make on your essentials and not from your emergency fund and retirement savings.

Priority No. 7 is yours.

Congratulations! You're in a great situation -- in a fantastic position, in the event that you've created an emergency fund, cleared excessive debt, and are stashing away 15% towards your retirement nest egg. You've built a habit of saving that gives you an incredible amount of financial flexibility. Don't give up today.

You should consider saving money for expenses that aren't emergencies, such as the replacement of your roof or next car. Those expenses will come no matter what, and it's better to save money for them rather than take out a loan.

Watch this video to learn more about Budgeting

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The authors' bios: Bev O'Shea worked as a writer for credit at NerdWallet. Her work has appeared in the New York Times, Washington Post, MarketWatch and elsewhere.

Lauren Schwahn covers consumer credit and debt for NerdWallet. Her work has been featured by USA Today and The Associated Press.

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How to Begin If You've Never had an Account with a Bank

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By Spencer Tierney Senior Writer | Certificates of deposit ethics, ethical banking, bank deposits Spencer Tierney is a consumer banker at NerdWallet. He has been writing about personal finance since 2013 with a focus on certificate of deposit and other banking-related topics. His work has been covered in The Washington Post, USA Today, The Associated Press and the Los Angeles Times, among others. He is located in Berkeley, California.

Updated Aug 11, 2020 6:46AM PDT

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Controlling your finances without a bank account is doable. However, it could be a challenge - and the COVID-19 pandemic has only increased the risk.

Your economic impact check may've come in a few weeks or months later than others' did with an e-check or prepaid debit card, since you weren't able to choose the speedier delivery option of direct transfer into the bank account. If you've visited the market recently you might have been required to pay by credit or debit card, or with exact change because of a nationwide shortage of coins and worries over germ transmission.

An bank account can make life more convenient in these circumstances and many other situations. To avoid problems in the future, consider opening one -or try it again when you've had a rejection previously. Here's how to get to the point of starting.

Assess your money needs

If you're among the 14 million people without a bank account in the U.S. There's a chance you have a system that works for you. It could be that you are making use of alternative products like pre-paid debit cards or Check cashing companies. Financial advisor Brandy Baxter has assisted clients who used check cashing services to meet practical reasons.

"They prefer to walk in and leave with cash in hand" says Baxter the accredited financial counselor and financial coach who manages the company Living Abundantly in the Dallas-Fort Worth region.

Check cashing shops like Check 'n Go as well as ACE Cash Express may operate extended hours than bank, and have easy approval processes for cash in a short time. However, they charge high fees, which can range between 1% and 6 percent or more on top of the amount you pay for your check.

Bank accounts are able to meet your requirements for money that are not met by prepaid cards and check cashing services are able to. For instance, their anti-fraud protections may limit the amount you pay if you're victimized, and many accounts let you lock debit cards remotely when stolen.

>> Tips on being able to recognize scams and fraud: Learn

Once you've established an association with a bank, other options are available such as credit cards, auto or small business loans and cheaper alternatives to payday loans could be within your reach.

Checking accounts "don't only aid in saving costs; they're the foundation for using different financial services," says David Rothstein the principal of Cities for Financial Empowerment Fund who oversees BankOn, a national platform that encourages financial inclusion.

Choose a lender that is right for you

If you are afraid of banks or you've had difficulty obtaining an account before you can open a bank account, community banks and credit unions are typically more friendly than national banks. They are often mission-driven -- for example, focusing on the financial wellbeing of their communities.

"We're extremely accommodating when it comes to giving people a second chance to try again," says Pedro Murillo, area branch manager in the San Francisco Bay Area for Self-Help Federal Credit Union. "If an employee comes in to apply for a loan and doesn't have pay stubs to show, do they have anything else (can they) bring to us? An email from (their) company? We're not willing to surrender."

Like other credit unions, Self-Help requires that a member open a savings account to be a member. The minimum amount required to open an account is typically a few bucks. Members are then able to apply for other services including a credit-building loan.

You can look up the term "CDFI" -- that stands for the community-based financial institution -which is a reference to . A lot of them require members to be located in the same state where the credit union or bank has branches.

What do you need to learn about applying

To create an account, you'll usually require to have your Social Security number, one or two forms of identification as well as money for your first deposit.

It is common to open two bank accounts at once: a checking and a savings account. The checking account allows access to a debit card and bill payment system as well as other services, while the savings account allows you to put funds aside and, in the ideal case increase its value by accruing interest.

Banks generally screen potential applicants using ChexSystems which is a nationwide reporting agency that maintains records of closed accounts at the request of a person. If you have lost access to an bank account in the past, you might be rejected by different banks until you pay off your ChexSystems record. This could mean the payment of debts to banks or disputing the errors in the records.

Once you're cleared, consider what banks typically refer to as a or a BankOn-approved checking account. Many of these don't charge fees for overdrafts. These occur if you attempt paying for something that will make your account negative.

The process of opening a bank account involves some effort. However, once you've been approved having a safe place for your money and a better likelihood of getting affordable loans will make it worth the effort.

"To have a checking account... is the cornerstone for any empowerment financial initiative," Rothstein says.

The post was written by NerdWallet and first published by The Associated Press.

The author's bio: Spencer Tierney is a writer and NerdWallet's official authority for certificates of deposit. He has had his work highlighted by USA Today and the Los Angeles Times.

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5 minutes read Read March 02, 2023

The article was written by Meaghan Hunt. Edited by personal Finance Contributor Meaghan Hunt, a researcher, writer and editor in a variety of disciplines, with a love of personal finance subjects. After 10 years of work in public libraries She now writes, edits, and conducts research as freelancer full-time. Editor: Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are committed to helping readers to take control of their finances with precise, well-studied and well-researched data that breaks down complicated issues into digestible chunks. The Bankrate promise

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If you have questions about money. Bankrate can help. Our experts have been helping you manage your money for more than four decades. We are constantly striving to give our customers the right advice and tools needed to be successful throughout their financial journey. Bankrate adheres to strict standards policy, which means you can be confident that our information is trustworthy and reliable. Our award-winning editors and reporters produce honest and reliable content that will help you make the right financial choices. Our content produced by our editorial team is factual, objective and is not influenced by our advertisers. We're transparent about how we are capable of bringing high-quality information, competitive rates and helpful tools to our customers by explaining how we earn our money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We receive compensation for the promotion of sponsored goods and services, or when you click on certain links posted on our site. So, this compensation can affect the way, location and in what order products are listed in the event that they are not permitted by law. We also offer mortgage, home equity and other home lending products. Other factors, like our own website rules and whether a product is available within your area or at your self-selected credit score range could also affect the way and place products are listed on this site. Although we try to offer a wide range offers, Bankrate does not include specific information on every financial or credit product or service. If you're considering buying a used or brand new car then a credit union is an excellent choice for a loan. The number of credit unions is more than 4800 federally insured credit unions in the United States, with over 134 million members, according to the National Credit Union Administration (NCUA). Banks with national affiliations have more branches, and they are typically quicker to roll out innovative technologies. Still, consumers keen on saving money should owe it to themselves to research the options that credit unions provide. Credit unions typically have more benefits greater advantages than online lenders and banks They also provide personal service as well as a range of other benefits. Key takeaways

Credit unions offer more borrower perks than some banks are in a position to be able to compete with. Lower interest rate, community presence, and a borrower-focused business model make credit unions stand out.

6 reasons to get a credit union car loan If you're in the market for your next car, take into consideration the following benefits of obtaining an auto loan from a credit union. 1. Lower interest rates . Unlike financial institutions, credit unions may provide lower rates since they're not for profit. They're also seeing an exponential rise in car loan originations. "Typically, the lending rate (at credit unions) is very competitive compared to other lenders in the majority of conditions," says Bill Meyer, former public relations manager and content manager at CU Direct, which connects credit unions and dealers of all kinds across the country. In the final quarter of 2022, the rate for the five-year new vehicle loan at a credit union averaged 4.74 percent, according to the NCUA. For banks, it was 5.53 percent. If you're borrowing $30,000 to purchase an automobile, the credit union saves you $327 on interest throughout the term that of the loan. 2. Personalized service, community connections The process of getting a car loan isn't much different between bank and credit union. But if you have less credit, you may still be eligible for an auto loan through the credit union rather than a bank. "Credit unions will likely be more flexible when it comes to underwriting," says Mike Schenk Vice President of Research and policy analysis for the Credit Union National Association (CUNA) an association for trade. Credit unions are also more likely to cooperate with you in the event that you go through an upswing and require longer to complete a payment. "You have a distinct story and it is greater chance of being heard by an institution like a credit union. When you work with large financial institutions there is a greater chance that you will experience underwriting that is set in stone and done in some corporate office a couple of states away. If you visit an institution like a credit union, and you're likely to engage in a discussion." 3. A user-friendly loan procedure Gone are the days of needing to go to a branch in order to get the car loan. Most credit unions now let you apply online, over the phone or . If you're applying for financing through a dealership, "invariably, the dealer can recommend credit union financing as well as a credit union you can become a member of," Schenk says, "so it's a simple process." However, you should before visiting the dealership. Not all dealerships collaborate with credit unions and if you can be a member it is likely that you will get the best deal when you work directly with the credit union. Additionally, you'll be offered a competitive loan offer before you begin car shopping and won't be required to pay a markup from the dealer on your rate. 4. Credit unions also have other advantages. Members, and not shareholders, own credit unions and any profits they earn are returned to members in the dividends. Credit unions are also able to give back profits to their members via greater rates on deposit accounts as well as on loan products, like auto loans. Most credit unions also participate in a shared branch as well as ATM network. Schenk says CUNA's members have a shared ATM network with over 40,000 outlets. Credit unions focus on educating their members as well, which means you can get advice on the best financial choices to suit your needs. "Credit unions are full-service with the same products like banks. They're just structured differently, and that results in significant benefits for the members of credit unions," Schenk says. The focus on members could mean a more nuanced dialog about your financial situation before the credit union either approves or denies your loan. Credit unions may be more understanding and flexible than traditional banks in making lending decisions. 5. Becoming a member is easy There are those who believe credit unions are available only to people who work for an industry, company or government organization, and that those who are not part of a group can't join. Meyer claims that this is no longer the case. "Most credit unions are now allowing anybody to become a member." CUNA has credit unions that have community charters, which allow them to serve more geographical regions. If you are looking for a credit union near you go to their website and enter your zip code. "It is a shock to see a person who didn't have access to the credit union," Schenk says. 6. Car loans are an integral part of the work of credit unions. Don't be shocked to hear that an auto dealer will refer customers to credit union before the bank. Credit unions for both used and new vehicles alike increased year-over-year to 17.9 percentage and 19.9 percent in each case, as per 2022 . Credit unions held $166.8 billion in loan balances for brand new cars at the close of the third quarter of 2022, and $305.3 billion in used cars. What is the procedure to apply for a credit union auto loan? A car loan with a credit union is similar as other loan providers, except for the membership process. Once you qualify as a member, you can apply for a car loan on the internet, by phone , or at a branch, depending upon the particular credit union. A majority of credit unions review the following information to determine your eligibility in the event of an auto loan your personal information. The information about your income and employment. Your . The vehicle identification number (VIN) and the miles for the car you wish to purchase. Be prepared to submit proof of insurance to the credit union in the application process. And note that while you might be able to sign up and get an auto loan the on the same day, certain credit unions may require you to wait a month or two before you can apply. What are the differences between a dealership, bank and credit union auto loan? The primary distinction between a bank and the credit union car loan is the terms for financing. Certain banks may offer promotional offers particularly if you have a solid relationship, good payment history and . Credit unions as well as banks can offer incentives, such as an autopay discount when you are an existing customer. Because credit unions are not for-profit entities and run by members, they typically get better rates and reduced charges compared with for-profit banks, which shareholders own. When you apply for a auto loan and you are approved, the loan originates from a third party financial entity. Dealers are paid to match you with any of their finance partners. This means that there are more options than the interest rate you pay through the dealer versus the interest rates offered by a credit union or bank. If there's any issue with the financing firm and the dealer isn't able to assist you -- you will need to solve the problem by yourself. If you are looking to purchase a new or used car There are many options to choose from for financing. If you're a member of an institution like a credit union, then you could have access to lower rates of interest and charges compared to banks with large branches or dealership loans. The process for applying is the same when you join and the advantages could aid in getting approved even in the event that you don't have the highest credit score.

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Written by a contributor to Personal Finance Meaghan Hunt is a research as well as a writer and editor across various disciplines who has a passion for personal finance-related topics. After 10 years of work in libraries that were open to the public and writing, she now writes, edits, and researches as freelancer for full-time. Written by Rhys Subitch Edited and written by Auto loans Editor Rhys has been editing and writing for Bankrate from late 2021. They are enthusiastic about helping readers gain confidence to manage their finances through providing precise, well-studied information that break down complex topics into digestible chunks.

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The typical used car costs less than a new vehicle by two-thirds. However, price isn't all that important and you should take into consideration factors such as the amount of miles you drive, length of ownership, and your lifestyle. To find out if is right for you, respond to the following questions for tailored advice.

Do you need to buy a brand used or new car? On the surface, it the latter will cost less. But buying used may also result in a loss of the most recent features available. It is a good choice if you like spending more, and you want the latest features as well as lower maintenance costs in the beginning. The benefits of buying the latest model include improved reliability, better interest rates and the option to personalize your purchase to your needs. But it also carries the cost of buying a larger purchase as well as an increased rate of depreciation. When you are looking for a new car, ensure you're ahead of time and try out different models of the model you are looking at. Considerations when buying used A is that it has no history of driving and potentially expensive maintenance costs. However, it is less expensive, hold cheaper insurance rates and depreciate in a more gradual manner. If you're looking to buy a used car, look into a different alternative. It will offer the benefits of a lower price tag while still holding the confidence of a vehicle which is properly maintained.

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Be sure to check your DMs for debt Collectors and Scams

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The article was written by Lauren Schwahn Lead Writer | Personal finance and the debt Lauren Schwahn is a writer at NerdWallet who writes about budgeting, debt and money-saving strategies. She is a contributor to the "Millennial Money" column for The Associated Press. The work she has contributed to was highlighted by USA Today, MarketWatch and many more. Lauren holds a bachelor's degree in history from The University of California, Santa Cruz. She is located within San Francisco.

Updated February 11, 2022 at 4:05 AM PST

Written by Kathy Hinson Lead Assigning Editor Personal finances, credit scoring financial management and debt Kathy Hinson leads the Core Personal Finance team at NerdWallet. Prior to joining NerdWallet, she worked for 18 years working at The Oregonian in Portland in positions such as copy desk chief and team director of design and editing. Previous experience included copy editing and news for various Southern California newspapers, including the Los Angeles Times. She earned a bachelor's degree in mass communication and journalism at Iowa's University of Iowa.

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Social media is where you watch cooking videos, gaze at images of beautiful travel destinations and doomscroll through the endless headlines of news. Today, websites like Instagram, Facebook and Twitter could also be where debt collectors slide into your DMs.

In the latter half of 2021, rules will be changed under the law that went into effect that specify how third-party debt collectors can communicate using email, social media and text messages.

Consumer advocates such as April Kuehnhoff, a staff attorney at the National Consumer Law Center, are concerned that these regulations could create confusion and a rise in scams.

"It's far less expensive to make use of electronic communication to reach out to larger numbers of people. There will be a surge in the number of illegitimate actors that are impersonating debt collectors, and sending emails, direct messaging or texting people in an attempt to make them pay off debts they don't really have," Kuehnhoff says.

Spotting the signs and knowing your rights will help you protect yourself from fraudulent and unfair practices. Here's what you should be looking for and what you can do to remain safe as you sift through the notifications.

Recognize warning signs

A variety of warning signs could warn you of abusive behavior or scams:

The message isn't confidential.

Debt collectors may request to join your followers or friends as in the event that they inform you they're debt collectors. However, the FDCPA requires that all communication must be private. It means that messages shouldn't be visible to the public or to anyone else within your network on the platform. If you receive a message others can see, that signals a bad actor.

Critical information is missing

Debt collectors are legally obligated to disclose specific information regarding the debt, including the amount due as well as the name of the creditor and details regarding your rights. They'll usually provide the information, referred to as a validation notice the first time they reach you or within 5 days.

"If someone is simply saying "I'm an debt collector' and not doing anything else, I would definitely be suspicious right from the beginning," says Katie Bossler who is a quality assurance expert at GreenPath which is a non-profit credit counseling company.

You're harassed or threatened

"Sometimes fraudsters threaten customers with arrest or deportation or try to convince them to paying quickly," Kuehnhoff says. It's not illegal for collectors to threaten customers or use abusive or vulgar words.

Collectors are also not able to legally pursue you if the debt is not time-barred or is past the statute of limitations. What can you do to determine whether your debt is time-barred? Find out the laws of your state and look over your payment history on your credit reports. Or, consider seeking help from your or a nonprofit credit counseling agency.

You're asked to make an unusual payment

Fraudsters often seek fast payment through difficult-to-recover methods. A legitimate debt collector won't require you to pay with unreliable methods like a money transfer, bitcoin terminal or prepaid card Kuehnhoff claims. "They will not advise you to visit the Apple store and buy an Apple gift card."

Do not pay for anything until verifying that the debt and the collector are legitimate. You can find out more by contacting the Federal Trade Commission.

Know and protect your rights

The FDCPA offers you certain protections. You can, for instance, opt out of communication. Collectors must provide an easy, no-cost method to cease contact via social media. That won't erase the debt however.

Additionally, you have the right to challenge a debt you believe is not correct or is not yours. However, you'll have to submit a written request within 30 days from receiving notice to challenge or seek more information regarding the debt. Information on how to do either must be included in the initial letter sent by the collector to you.

What can you do to verify that the debt is legitimate and the collector is? Bossler suggests starting with pulling your free credit reports from AnnualCreditReport.com. "Make a list of all the debts that you owe to debtors, the balances, accounts numbers. The debt collector will often refer to the last four digits of the bank account," Bossler says.

You may be dealing with a collection agency for the original creditor and this makes it much easy to connect the information. But the original creditor may have transferred this debt to an external company. That third-party collector should give information like their name, business name and postal address. These details can be used to confirm their authenticity.

"Several states have debt collection licenses registered at the NMLS, which is the National Multistate Licensing [System]," Kuehnhoff says. "Even if your state doesn't utilize it, it could be a helpful place to verify if this name is a legitimate debt collection company that is registered across other states."

Even if all is well do not feel pressured to pay right away. Paying off a debt could bring back the debt that is beyond the statute of limitations. Instead, take the time to create plans that work for your financial situation and personal budget.

If a debt collector violates your rights, or you come across fraud, you may complain to the FTC and the Consumer Financial Protection Bureau or the office of your state attorney general.

The article was written by NerdWallet and was first printed by The Associated Press.

Author bios: Lauren Schwahn covers consumer credit and debt for NerdWallet. Her work has been highlighted by USA Today and The Associated Press.

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What does a Fed Rate increase in 2023 will mean for Savings Accounts

Advertiser disclosure You're our first priority. Each time. We believe that every person should be able to make financial decisions with confidence. Although our site does not include every company or financial product on the market, we're proud of the advice we offer as well as the advice we provide and the tools we develop are objective, independent simple, and cost-free. So how do we make money? Our partners compensate us. This can influence the products we review and write about (and the way they appear on our website) However, it does not affect our suggestions or recommendations which are based on many hours of study. Our partners do not be paid to ensure positive review of their services or products. .

What will Fed Rate increases in 2023 Mean for Savings Accounts

The rates of interest for high yield savings accounts in 2023 could continue to increase, though not as fast or as high as in the year before.

By Margarette Burnette Senior Writer Savings accounts as well as money market accounts banks Margarette Burnette has been a savings expert who has written about bank accounts from before even the Great Recession. Her writing has been featured in major newspapers. Prior to being a member of NerdWallet, Margarette was a freelance journalist, with articles in magazines such as Good Housekeeping, and Parenting. Margarette is located near Atlanta, Georgia.

Updated Mar 22, 2023

Written by Yuliya Goldshteyn Assistant Assigning Editor Yuliya Goldshteyn is a bank editor with NerdWallet. She previously worked as an editor, researcher, and a writer across a range of industries from health care as well as market research. She earned a bachelor's degree in history from the University of California, Berkeley and a master's in sociology from University of Chicago, with the focus on Soviet culture and history. She lives within Portland, Oregon.

The majority or all of the products we feature are provided by our partners, who we pay. This affects the products we feature and where and how the product is featured on the page. However, it does not affect our assessments. Our opinions are entirely our own. Here is a list of and .

It's 2023 and the Federal Reserve just announced its second federal funds rate range hike of 0.25 percent. This is after seven rate hikes in 2022. The new target that is a range of 4.75% to 5 percent. This is less than some of the dramatic changes expected in 2022, however the increase also means that rates have reached their highest levels since 2006.

The recent rate increases mean loans as well as credit card debt are more costly. But if you have an account for savings or a certificate of deposit, you could profit. This is a look at the implications of the most recent rate hike could mean for savings accounts in 2023.

Rates of savings in 2023: 4APY or more

In the early 2022 years, some of the top savings accounts had a 0.50% annual percentage yield. The best savings accounts are .

It's an impressive jump for just one year. Because the most recent federal funds rate increase the is smaller compared to most of the 2022 rate increases, don't expect to see APYs that are almost Eight times as high. But, you could see yields that edge slightly higher, and include more accounts that exceed the 4% mark.

Pay attention to high-yield online savings accounts specifically, which are likely to have the highest rates.

On the other hand the savings accounts of a handful of the biggest national banks have rates of 0.01 percent, despite numerous federal fund rate hikes last year. The rates are lower than the average national savings rate, which is 0.37 percent in March 20th 20, 2023, as per the Federal Deposit Insurance Corp.

If you own a savings account with a poor rate, it could be worthwhile to look for savings accounts that pay 3%-4% APY.

Savings are reinvested into the future

One of the main reasons why the Federal Reserve has been increasing rates is that it wants to combat inflation. According to the U.S. Bureau of Labor Statistics, the consumer price index, which is often used as a measure of inflation, increased 6.0% year over year in February 2023. That figure, while relatively higher than prior years, is still lower than it was in June 2022, when CPI was 9.1 percent higher year on year.

It's a great reason to invest in a high-yielding account right now. Nobody can foretell the future however having a solid savings account can prepare for a financial storm.

It's ideal to have three to six months of expenditures in savings However, that's a significant amount. If you don't have that amount of money saved up, you can accumulate it over time in amounts that work for you.

Imagine you receive a check twice per month and you have the ability to save $50 each payday. You'll have over 600 dollars saved in six months, and that can help in a financial emergency. Placing that money in an account with a higher rate could help you build your savings.

The difference that a high yield savings account can make

Where you keep your savings could affect your balance. If you put your emergency fund of $600 in an account with a 0.01 percent APY similar to that is offered by a number of the largest national banks, and you didn't make any additional deposits, it's worth the sum of 6 cents after a year. If that money were in a high-yield savings account that earns a 4.00 percent annual percentage rate even if you didn't make any further deposits and the balance would grow by more than $24 during the same time. This is a huge benefit for choosing a more efficient savings account.

Learn how APYs are changing in high-yield accounts as opposed to regular accounts

March 2023

February 2023

January 2023

December 2022

November 2022

October 2022

September 2022

August 2022

Online institutions

Member FDIC.

3.40% APY.

3.40% APY.

3.30% APY.

3.30% APY.

3.00% APY.

2.35% APY.

1.85% APY.

1.85% APY.

, Member FDIC.

4.05% APY.

4.05% APY.

4.05% APY.

3.85% APY.

3.60% APY.

3.00% APY.

2.10% APY.

2.10% APY.

, Member FDIC.

4.00% APY.

4.00% APY.

4.00% APY.

3.60% APY.

3.25% APY.

3.12% APY.

2.07% APY.

2.07% APY.

National brick-and-mortar banks

, Member FDIC.

0.01% APY.

0.01% APY.

0.01% APY.

0.01% APY.

0.01% APY.

0.01% APY.

0.01% APY.

0.01% APY.

, Member FDIC.

0.01% APY.

0.01% APY.

0.01% APY.

0.01% APY.

0.01% APY.

0.01% APY.

0.01% APY.

0.01% APY.

You can try your own calculations using NerdWallet's to see what your savings could earn.

Fed rate increases will continue through 2023 -- at least to date. You can take advantage of this by putting your money in a high-yield savings account. You'll earn better rates than with a regular savings account and are better equipped for whatever financial challenges come your way.

Author bios: Margarette Burnette is a savings account expert at NerdWallet. She has had her work highlighted in USA Today and The Associated Press.

On a similar note...

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4 min read published March 22 2023

Written by Rebecca Betterton Written by Auto Loans Reporter

Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers to navigate the ways and pitfalls of taking out loans to purchase an automobile.

Editor: Rhys Subitch Edited by Auto loans editor

Rhys has been writing and editing for Bankrate since late 2021. They are passionate about helping readers gain confidence to control their finances by providing clear, well-researched information that breaks down complicated topics into manageable bites.

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At Bankrate we strive to help you make better financial decisions. We adhere to the highest standards of journalistic integrity ,

this post may contain the mention of products made by our partners. Here's an explanation for how we earn our money .

The promise of the Bankrate promise

Established in 1976, Bankrate has a long history of helping people make wise financial decisions.

We've maintained this reputation for more than 40 years by simplifying the process of financial decision-making

process and giving people confidence in the decisions they will follow next. process that is a strict ,

so you can trust that we're putting your interests first. All of our content was written with and edited

who ensure everything we publish ensures that everything we publish is accurate, objective and trustworthy. We have a team of loans reporter and editor are focused on the areas that consumers are concerned about the most -- the various types of loans available as well as the best rates, the most reliable lenders, ways to repay debt, and more . This means you're able to be confident about making your investment.

Editorial integrity

Bankrate follows a strict standard of conduct, which means you can be confident that we'll put your needs first. Our award-winning editors and journalists provide honest and trustworthy content to assist you in making the right financial choices. Our main principles are that we value your trust. Our goal is to offer readers accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly verify the truthfulness of content in order to make sure the information you're reading is accurate. We have a strict separation between our advertisers and our editorial team. The editorial team of Editorial Independence Bankrate does not receive compensation directly through our sponsors. Editorial Independence Bankrate's editorial staff writes in the name of YOU as the reader. Our aim is to provide you the best advice that will help you make smart financial decisions for your personal finances. We follow the strictest guidelines in order to make sure that content isn't affected by advertisements. Our editorial staff receives no direct compensation from advertisers, and our content is thoroughly checked for accuracy to ensure its truthfulness. So, whether you're reading an article or review, you can trust that you're receiving reliable and dependable information.

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There are money-related questions. Bankrate has the answers. Our experts have been helping you manage your money for over four decades. We strive to continuously provide consumers with the expert advice and tools needed to succeed throughout life's financial journey. Bankrate follows a strict , therefore you can be confident that our content is honest and precise. Our award-winning editors and journalists provide honest and trustworthy information to assist you in making the best financial decisions. The content we create by our editorial staff is factual, objective and uninfluenced from our advertising. We're transparent about how we are capable of bringing high-quality content, competitive rates and useful tools for you , by describing how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and services or through you clicking certain links posted on our website. Therefore, this compensation may influence the manner, place and in what order items are listed and categories, unless it is prohibited by law. We also offer mortgage home equity, mortgage and other home loan products. Other factors, like our own proprietary website rules and whether the product is available within your region or within your self-selected credit score range could also affect how and where products appear on this website. We strive to provide an array of offers, Bankrate does not include specific information on each financial or credit item or service.

However, inflation and its effects are not going away anytime soon. According to Bankrate's Third Quarterly , the majority of economic experts agree that inflation will become greater in the coming twelve to 18 months. Since it's likely that inflation has yet to peak, it is crucial to plan for its impact -- one being increased interest rates. What does the Fed influences auto loan rates

The Federal Reserve doesn't directly influence auto loan rates however, it can affect the cost that lenders pay to borrow money. A rise in the Fed rate usually means lenders are quick to follow.

How does inflation affect interest rates? Choices made by the Federal Reserve affect the which can have a ripple effect to the costs of car financing. While a driver's rate is contingent on several aspects -- including the credit history and length of term, the vehicle model and more- increased inflation means higher rates of interest for motorists even with perfect credit. "One one of the Federal Reserve's primary tasks is to keep their purchasing power in check and they accomplish this by increasing interest rates," says Sarah Foster, senior U.S. economy reporter for Bankrate. To achieve this goal to achieve this goal, the Fed raised rates again in March, setting the benchmark rate to 4.75-5 percent. This is a step in the direction of a tight car market as supply chain issues keep vehicle costs high. They averaged over $48,300 according to . These rising interest rates make it more expensive to lend money, according to Foster. This makes the cost of financing automobiles significantly higher than in the years prior. Since the start of 2022, average vehicle interest rates have been on the rise: 1.77 percentage points for a 60-month new car loan and 1.78 percent points on a used 48-month loan in accordance with a national Bankrate survey of rates. The higher interest rates are one of the outcomes of the Feds aim to curb inflation. "Higher cost of borrowing doesn't simply hinder spending but also rob people out of being able to afford big-ticket items, causing economic growth to slow," Foster says. "The hopes are that, in the end, these more expensive rates will stifle the demand to such an extent that inflation will eventually fall," Foster says. But this wish doesn't come with risk "An economy starved of consumption typically means a recession which isn't pleasant for anyone." With the above in mind drivers will be met with more expensive rates in the meantime as the Fed continues to control high inflation. Now is the time to prepare for raising costs. Data come from Bankrate

8/10/2022 rate for a 30-month new car loan

4.94%

10/12/2022 rate for a 30-month new car loan

5.56%

As you can see, rates have jumped significantly since August, in keeping with Fed meeting. The increase could be due to the increase in the benchmark rate, as well as the more expensive cars. Stay up to date with new developments and the impact it has on your financial position on . How to get a deal in times of high interest rates The interest rate you pay is contingent on a myriad of factors, which includes inexplicably high inflation rates however, there are some moves that you can take to be influenced to the Fed. Shop around Most lenders will offer higher rates at the moment however, that shouldn't diminish the benefits of shopping around. And terms from at least three lenders to decide which quote is the best fit for your needs. Be aware of the APR available and the repayment term. Determine the true cost of ownership. As car prices rise to record levels it is essential to concentrate on your budget when you shop. Without much wiggle room it is important to determine figure out how much you are able to afford before setting out to the dealership. This way you will understand the amount you will require to borrow to purchase your new car. Tips for Bankrate

Make sure you look at the total loan amount and not just the monthly payment. While it can be enticing to borrow a loan that has less expensive monthly payment however, it may be more expensive in the long run.

Consider an electric car The upfront tends to be higher, but they do carry added benefits outside of the fuel pump. When you apply for a loan and then receiving it, you will be able to make back any money that may be lost due to the higher interest rates. Lock in expected financing One of the best methods of getting a good bargain is to get a loan that will provide you with a firm understanding of what the expected costs will likely be. There are a few lenders that offer this option, so look out for it when shopping around. If you are buying a second-hand car, unfortunately new and used vehicles have higher rates right now, but the used ones are less expensive. If you are flexible in the type of vehicle you're looking for, it could reduce your monthly cost. Refinancing your loan after rates drop One of the most effective time to look into the possibility of refinancing your auto loan can be at a time when interest rates have lowered while your credit improved. The is fairly similar to the procedures you follow when you first applied for the loan. Evaluate current loan. Before you begin refinancing, it is crucial to review your current loan including the terms as well as the exact interest rates. Make use of this to assess potential monthly savings after you have these numbers in your head. Review your credit. With a thorough understanding of your credit, you will be able to find out where you are in relation to the lenders you can choose from. Refinancing is a possibility similar to any loan -- the better your credit, the more affordable rate you'll be. Determine the value of your vehicle. Based on the value of your vehicle refinancing it might not be the most efficient financial decision. If you've almost finished paying off your vehicle and are looking to refinance, it's not a good idea to refinance. Shop around. At least three lenders is the key to getting a good deal. An excellent place to start is the bank or lender which you approved with. There may be discounts available for customers who are currently customers. Although not all lenders allow to refinance your existing loan. Get new conditions. After providing the documentation required and in some cases paying a penalty for prepayment, you will be able to receive new terms. When you close the chapter, this procedure, make sure you settle your previous lender. Now might not be the right time to buy even though many people don't need to be waiting around to buy a car, patience may be on your side in making money now. The likelihood of rising even more following the next Fed meeting combined with cost of vehicles that are high make this an uneasy time to purchase. It is better to wait until rates fall. Learn more

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Authored by Auto Loans Reporter

Rebecca Betterton is the auto loans reporter for Bankrate. She has a specialization in helping readers with the ways and pitfalls of using loans to buy the car they want.

Edited by Rhys Subitch Edited by Auto loans editor

Rhys has been writing and editing for Bankrate since late 2021. They are passionate about helping readers gain confidence to manage their finances by providing clear, well-researched facts that break down complicated topics into bite-sized pieces.

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How we make money Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for the placement of sponsored products and services or for you clicking specific links on our site. This compensation could impact how, where and in what order products appear within listing categories, except where prohibited by law. This is the case for our mortgage home equity, mortgage and other products for home loans. Other factors, such as our own website rules and whether the product is available within the area you reside in or is within your self-selected credit score range can also impact the way and place products are listed on this site. While we strive to provide an array of offers, Bankrate does not include specific information on each financial or credit item or service. Bankrate, LLC NMLS ID# 1427381 | BR Tech Services, Inc. NMLS ID #1743443 |

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Debt Management Plans: Find the One that is Right for You

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Debt Management Plans: Choose the Best One for You

Find out about different debt management plans' features and prices to determine the best fit.

By Sean Pyles Senior Writer | Personal finances, credit, and personal finance Sean Pyles leads podcasting at NerdWallet as the host and producer of the NerdWallet's "Smart Money" podcast. In "Smart Money" Sean talks with Nerds across the NerdWallet Content team to answer the questions of listeners about their personal finances. With a focus on shrewd and practical advice on money, Sean provides real-world guidance to help people improve the financial situation of their lives. Beyond answering listeners' money concerns on "Smart Money," Sean also interviews guests outside of NerdWallet and produces special segments to explore topics such as the racial gap in wealth, how to start investing, and the background of college loans.

Before Sean was the host of podcasting at NerdWallet He also covered issues related to consumer debt. His work has appeared on USA Today, The New York Times and elsewhere. When he's not writing about personal finance, Sean can be found digging around his garden, taking runs , and walking his dog for long walks. He is based in Ocean Shores, Washington.

Updated on Aug 17, 2021 9:47PM PDT

Written by Kathy Hinson Lead Assigning Editor Personal finances, credit scoring debt and money management Kathy Hinson leads the Core Personal Finance team at NerdWallet. In the past, she worked for 18 years at The Oregonian in Portland in roles including copy desk chief and team editor and designer. Prior experience includes news and copy editing for several Southern California newspapers, including the Los Angeles Times. She graduated with a bachelor's in mass communications and journalism from the University of Iowa.

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Are you feeling overwhelmed by debt? A debt management program could be the answer.

The debt payoff tool will put you in a position to settle your debts -- typically from credit cards in three to five years. With a DMP it is possible to have multiple debts put into one payment and creditors reduce your interest rate. In exchange, you sign an installment plan that typically is between three and five years. Note that interest rate cuts are uniform throughout credit counseling organizations that are based on your creditors' guidelines and your budget.

Here's a comparison of the plans for managing debt at a important non-profit .

Agency / availability

Average fees

Available in 50 states

The cost of the initial fee is $31.

20 monthly fees

All states are available, with the exception of Minnesota

Start-up fee of $42

Monthly fee of $30

The 50 States are represented as well as Puerto Rico

$24 startup fee

A monthly payment of $28 is charged.

In 50 States

$35 for the initial fee

Monthly fee of $29

In 50 States

$35 start-up fee

$24 monthly fee

Plans for managing debt: Pros and pros and

Pros:

Can cut your interest rate by more than half.

Aids in paying off debt faster rather than doing it yourself.

Consolidates multiple debts into one installment.

Cons:

This is typically used to pay intended for debts incurred through credit cards; is not suitable to finance student loans as well as medical debts or tax obligations.

The plan lasts between three and five years, and you're generally unable to get credit cards or get new lines of credit during the time you're on the plan.

Missing a payment can derail the plan and cause interest rate reductions.

It's debt-crushing time

Sign up to link and monitor everything from cards to mortgages from mortgages to credit cards all in one place.

Do you think a debt management program is the right choice for you?

DMPs aren't for everyone. Depending on the agency, about 10 20 to 20% of clients are able to avail this debt relief option. Of those who do, around 50% to 70% have completed the program, based on the year and the way the agency reports accomplishments.

You might consider an DMP If:

Your unsecured debt like credit cards, is between 15% and 39% of your annual income.

You earn a steady income and you think you can pay off your debt in five years if you were to pay an interest rate that was lower.

You can get by without opening up new credit lines while you are on the plan.

Alternatives to a debt management strategy

DMPs do not always cover all expenses . Troublesome debts from student loans and medical expenses typically aren't covered under such plans. Other optionsinclude:

If the amount of debt you are struggling with is not more than 15 percent of your income then you can try an DIY approach by using the method.

A , if you've got good enough credit to qualify and you are able to combine your debts into one at a lower interest rate. You have control over the length of time that the loan is and also have the ability to open new credit lines.

You may want to consider this option if your debt is higher than 40 percent of your income and you see no way to pay the debt off in five years. The debt-relief tool could quickly give you a fresh start, and consumers have credit scores that begin to improve in as little than six months.

What you need to know

If you think a DMP might be your best choice for debt relief, start with . Consider:

Certification and accreditation: Look for an agency which is a member of the or the . They require that agencies be certified by an independent group and both require certification and a standard level of professionalism among counselors.

Access: Consider which method you'd prefer to use to get services: over the telephone, in person or online.

Cost: Fees are different depending on the agency and state that you reside in and your financial need. Before you sign up, make sure you know how much you'll be paying each month to your debt as well as fees.

The author's bio: Sean Pyles is the executive producer and host of NerdWallet's Smart Money podcast. His work has appeared on The New York Times, USA Today and elsewhere.

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