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Money & Taxes?

Refunds, tips, credit, and the numbers nobody taught you in school. 54 questions and counting.

Debit or credit: which should you actually use?Use credit like a debit card: fraud on credit is the bank's money while they investigate, fraud on debit is yours. Federal…
How do you dispute a credit card charge?Contact the merchant first, then file a dispute with your card issuer. Federal law gives you 60 days from the statement date…
How does a 401(k) work?A 401(k) is a retirement account through your employer: money goes in before taxes, grows untaxed, and any employer match is…
How does credit card interest actually work?Pay the statement balance in full and interest never touches you: the grace period makes the card an interest-free loan…
How big should an emergency fund be?Three to six months of essential expenses, not income. Single earner or variable pay, aim for six. Starting from zero, the…
How much should I tip?Tip 20 percent at sit-down restaurants, a dollar or two per drink at a bar, and 15 to 20 percent for delivery and rideshare…
Is buy now, pay later a good idea?Pay-in-four is a real loan wearing a checkout button. Zero interest if perfect, but late fees, overdrafts, and stacking…
Is renting really throwing money away?No. Renting buys housing; owning buys housing plus a leveraged asset plus taxes, insurance, maintenance, and transaction…
Roth or traditional: which retirement account wins?Traditional saves taxes now; Roth saves them later. Young or in a low bracket, take the Roth: pay tax on the seed, not the…
What credit score do you need to buy a house?You can get an FHA mortgage at 580 and a conventional one at 620, but the real prize starts around 740, where the best rates…
What is a high-yield savings account, and should you have one?A savings account paying many times the national average, usually from an online bank with the same FDIC insurance. Moving…
What is an index fund, and why do experts keep recommending it?A fund that buys the whole market instead of guessing winners. S&P scorecards show roughly 90 percent of professional stock…
What is compound interest, and why does everyone worship it?Compound interest is interest earning interest on itself. The rule of 72: divide 72 by your annual return to get the years…
What is the 50/30/20 budget rule?50 percent of take-home pay to needs, 30 to wants, 20 to savings and debt payoff. Popularized by Elizabeth Warren before the…
When are taxes due?Federal taxes are due April 15, or the next business day if that lands on a weekend or holiday. An extension moves the…
Where's my tax refund?E-file with direct deposit and the IRS pays most refunds within 21 days. Track yours at irs.gov/refunds. Calling the IRS…
What is a CD, and when does it make sense?A savings product that locks your money for a set term in exchange for a fixed rate. It makes sense for money you will not…
What is the difference between a credit union and a bank?A credit union is a nonprofit owned by its members, a bank is a for-profit company owned by shareholders. Credit unions…
What happens if you stop paying a credit card?Late fees and a penalty rate at 30 days, credit report damage that lasts seven years, charge-off and sale to a collector…
What is an expense ratio, and how much does it actually cost you?The annual percentage a fund charges to run itself, deducted automatically so you never see a bill. It sounds trivial and is…
How does capital gains tax work?You owe tax on profit when you sell, not while you hold. Assets held over a year get long-term rates that are substantially…
What happens to your debt when you die?It is generally paid from your estate, and family members are usually not personally liable. The major exceptions are…
What are your rights when a debt collector contacts you?You can demand written validation within thirty days, tell them to stop contacting you in writing, and they cannot threaten…
Does debt consolidation actually work?It works when it genuinely lowers your rate and you stop adding new debt. It fails when it treats a spending problem as a…
Where should you actually keep your emergency fund?Somewhere liquid, stable, and boring: a high-yield savings account, money market fund, or short-term Treasuries. Not in…
Do you actually need a will?If you have kids, the will is where you name their guardian, so yes, urgently. No will means your state's intestacy formula…
What is the difference between gross and net pay?Gross is what you earn; net is what hits your account after taxes, Social Security, Medicare, insurance, and retirement come…
How do overdraft fees work, and how do you stop paying them?Overdraft coverage on debit purchases is optional: federal rules require you to opt in, so opt out and cards simply decline…
How much house can I afford?The classic guardrail: keep housing under 28 percent of gross income and total debt under 36 percent. Lenders will approve…
How much life insurance do you actually need?The rule of thumb is 10 to 12 times income, but the honest method is adding up what would actually need paying: the…
How do I build credit from nothing?Get one card, put a small recurring bill on it, pay in full every month, and keep the account open. On-time payments and low…
How do you calculate net worth, and what should yours be?Everything you own minus everything you owe: accounts plus home value plus retirement, minus mortgage, loans, and cards. The…
Term or whole life insurance: which should you buy?Term, for almost everyone: pure coverage for the decades someone depends on your income, at a tenth the price. Whole life is…
W-2 vs. 1099: what is the real difference?W-2 employees get taxes withheld and benefits; 1099 contractors get the full check and the full tax bill, including both…
What does a financial advisor actually cost, and do you need one?Commonly around 1 percent of assets annually, which compounds into a large sum over decades. Ask whether they are a…
What happens if I don't file taxes?Not filing costs ten times more than not paying: 5 percent of the balance per month versus 0.5 percent. File even if you…
What is a credit freeze, and should you have one?A freeze blocks anyone from opening credit in your name, it is free by federal law at all three bureaus, and it is the…
What is the difference between an HSA and an FSA?An HSA requires a high-deductible health plan, the money is yours forever, it rolls over, and it can be invested. An FSA is…
What is an HSA, and why do people call it the best account in the tax code?The HSA is the only triple tax-free account: deductible going in, tax-free growth, tax-free out for medical costs. Pair it…
What is APR and why is it different from the interest rate?APR is the true yearly cost of borrowing: the interest rate plus required fees. Comparing loans by APR instead of rate is…
What is dollar cost averaging, and does it work?Investing a fixed amount on a schedule regardless of price. Research finds lump sum investing beats it about two thirds of…
What is escrow on a mortgage?Escrow is a side account your lender runs inside your mortgage payment, collecting a twelfth of your property taxes and…
What does FDIC insured actually mean?If your bank fails, the federal government makes you whole up to $250,000 per depositor, per bank, per ownership category…
What is inflation, actually?Inflation is the rate at which prices rise across the whole economy, measured by the CPI. Two percent a year is the Federal…
What is PMI, and how do you get rid of it?PMI insures the lender, not you, and it is the surcharge for putting under 20 percent down. By federal law it must…
What is a bond, and why do bond prices fall when rates rise?A bond is a loan you make to a government or company in exchange for fixed interest. Prices move opposite to rates because a…
What is the difference between an ETF and a mutual fund?Both are baskets of securities. ETFs trade throughout the day like a stock and are generally more tax-efficient in taxable…
What does diversification actually do?It removes the risk specific to any one company or sector without reducing expected return, which is the closest thing…
What is a 529 plan, and is it worth using?A tax-advantaged account for education costs where growth and qualified withdrawals are tax-free. Non-qualified withdrawals…
What does bankruptcy actually do?Chapter 7 discharges most unsecured debt in a few months after liquidating non-exempt assets. Chapter 13 reorganizes debt…
What is an annuity, and should you buy one?A contract with an insurer converting money into guaranteed income. Simple immediate annuities solve a real problem, which…
What is portfolio rebalancing, and how often should you do it?Selling what has grown and buying what has lagged to restore your target mix. Once a year or when an allocation drifts past…
What is a backdoor Roth IRA?A legal workaround for people whose income exceeds Roth contribution limits: contribute to a traditional IRA, then convert…
What is tax loss harvesting?Selling investments at a loss to offset gains and reduce taxes, then reinvesting in something similar but not identical. It…