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Mortgage Payments Haven’t Been This Unaffordable Since 2008

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Record growth in home prices has made owning a home less affordable than at any point since the financial crisis. The median American household would need 32.1% of its income to cover mortgage payments on a median-priced home, according to the Federal Reserve Bank of Atlanta. That is the most since November 2008, when the same outlays would eat up 34.2% of income. The Wall Street Journal reports:

Supercharged home prices in markets across the country are canceling out the impact of modestly higher incomes and historically low interest rates, two factors that typically make owning a home more affordable. Prices rose at a record pace for the fourth consecutive month in July, driven by a shortage of houses for sale. Higher prices require buyers to take out larger loans, essentially signing them up to make larger mortgage payments each month for years.

The Atlanta Fed calculates affordability using a three-month average of median home prices from CoreLogic Inc. and median household incomes based on census data. In July, the latest month in the Atlanta Fed’s calculations, median home prices were $342,350, up 23% from the year before. Median incomes were $67,031, up 3%.

Declining affordability will have the biggest impact on buyers shopping for their first homes, who will have to sign up for larger monthly payments, buy less desirable homes or step back from the market altogether, economists said.

401(k) Balances Hit a New All-Time High

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Retirement account balances are at new highs, according to Fidelity Investments. Thanks to the market’s recent run-up and increased savings, the number of 401(k) and IRA millionaires also hit all-time records in the second quarter of 2021. CNBC reports:

Retirement account balances, which took a sharp nosedive in 2020 when the coronavirus outbreak caused economic shock waves, are now at new highs, according to the latest data from Fidelity Investments, the nation’s largest provider of 401(k) savings plans.

The overall average 401(k) balance hit $129,300 as of June 30, up 24% from the same time last year, according to Fidelity. Individual retirement account balances were also higher — reaching $134,900, on average, in the second quarter, up 21% from a year ago.

Despite Covid case numbers rising in the U.S. and around the world, the year’s market highs have been a boon for savers. In the second quarter, the S&P 500 ended up 8.2%, before retreating more recently.

Nearly 12% of workers increased their contributions during this time, while a record 37% of employers also automatically enrolled new workers in their 401(k) plans. As a result, the number of 401(k) and IRA millionaires hit fresh highs, as well. 

Study: More You Make, Longer You’ll Live

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New research shows that every $50,000 of income lowers a person’s risk of death by five percent. Money may not buy happiness, but it could buy you a longer life. New research concludes that being wealthy can add years to your lifespan. Study Finds reports:

Researchers at Northwestern University say that every time another $50,000 accumulated by middle age, an individual’s risk of death drops. And for those who had stashed $139,000 more than a sibling, their chances of outliving them increased.

The study is based on 5,400 Americans tracked for almost a quarter of a century.

“One of the keys to a long life may lie in your net worth,” says corresponding author Dr. Eric Finegood, a postdoctoral fellow in the Institute for Policy Research at Northwestern. in a statement.

Unsurprisingly, the COVID-19 pandemic widened the wealth gap. Amid the misery, the number of millionaires in the U.S. rose last year by 5.2 million – to over 56 million. Mortality rates fell five percent for every additional $50,000 of net worth accumulated by middle age.

Moreover, the same phenomenon was identified among the 2,490 who were twins or siblings. Big earners were more likely to outlive brothers and sisters on smaller salaries. “A difference of $139,000 was associated with a 13 percent relative decrease in the probability of death nearly 24 years later, favoring the family member with a higher net worth,” says Dr. Finegood.

It suggests affluence leads to good health, rather than being a reflection of heritable traits or early experiences that cluster in families.

Financially Hobbled for Life: The Elite Master’s Degrees That Don’t Pay Off

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Columbia and other top universities push master’s programs that fail to generate enough income for graduates to keep up with six-figure federal loans. The Wall Street Journal reports:

Recent film program graduates of Columbia University who took out federal student loans had a median debt of $181,000. Yet two years after earning their master’s degrees, half of the borrowers were making less than $30,000 a year. The Columbia program offers the most extreme example of how elite universities in recent years have awarded thousands of master’s degrees that don’t provide graduates enough early career earnings to begin paying down their federal student loans, according to a Wall Street Journal analysis of Education Department data. Recent Columbia film alumni had the highest debt compared with earnings among graduates of any major university master’s program in the U.S., the Journal found. The New York City university is among the world’s most prestigious schools, and its $11.3 billion endowment ranks it the nation’s eighth wealthiest private school.

For years, faculty, staff and students have appealed unsuccessfully to administrators to tap that wealth to aid more graduate students, according to current and former faculty and administrators, and dozens of students. Taxpayers will be on the hook for whatever is left unpaid. Lured by the aura of degrees from top-flight institutions, many master’s students at universities across the U.S. took on debt beyond what their pay would support, the Journal analysis of federal data on borrowers found. At Columbia, such students graduated from programs including history, social work and architecture. Columbia University President Lee Bollinger said the Education Department data in the Journal analysis can’t fully assess salary prospects because it covers only earnings and loan repayments two years after graduation. “Nevertheless,” he said, “this is not what we want it to be.”

At New York University, graduates with a master’s degree in publishing borrowed a median $116,000 and had an annual median income of $42,000 two years after the program, the data on recent borrowers show. At Northwestern University, half of those who earned degrees in speech-language pathology borrowed $148,000 or more, and the graduates had a median income of $60,000 two years later. Graduates of the University of Southern California’s marriage and family counseling program borrowed a median $124,000 and half earned $50,000 or less over the same period. “NYU is always focused on affordability, and an important part of that is, of course, to help prospective students make informed decisions,” said spokesman John Beckman. Northwestern spokeswoman Hilary Hurd Anyaso said the speech-language pathology program is among the best in the world, leading to a “gratifying career path that is in high demand.” USC spokeswoman Lauren Bartlett said providing students financial support and employment opportunities was a priority for the school.

The top 1% of Americans have about 16 times more wealth than the bottom 50%

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The wealthiest 1% of Americans controlled about $41.52 trillion in the first quarter, according to Federal Reserve data released Monday. Yet the bottom 50% of Americans only controlled about $2.62 trillion collectively, which is roughly 16 times less than those in the top 1%. CNBC reports:

Wealth across all U.S. households increased during the first quarter. Overall, the net worth of households and nonprofits rose to $136.9 trillion during the first quarter, a 3.8% increase from the end of 2020, according to separate data published by the Federal Reserve on June 10, 2021. But those gains weren’t distributed equally.

The recent gains in household wealth, in particular, can be largely attributed to stock holdings, which were up about $3.2 trillion, according to the Fed. The rise in home values also played a role, with real estate holdings increasing by $1 trillion.

But some critics contend that the Fed’s low interest rate policieshave boosted the stock market, giving an edge to those who own stocks and investments. The wealthiest 10% of Americans, for example, own about 89% of stocks and mutual funds held in the U.S. as of the first quarter of 2021, according to Fed data. The bottom 50% of U.S. households hold around 0.5%.

Number of 401(k) and IRA Millionaires Hits Record

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The number of 401(k) and IRA millionaires also hit an all-time record in the first quarter of 2021, according to Fidelity. CNBC reports:

Retirement account balances, which took a sharp nosedive almost exactly one year ago when the coronavirus outbreak caused economic shock waves, have now bounced back entirely, according to the latest data from Fidelity Investments, the nation’s largest provider of 401(k) savings plans.

And despite three recent days of losses, the market’s run-up has been a boon for savers.

From January 2020 to the beginning of this month, the S&P 500has had an annual return of more than 20%, according to Morningstar Direct. 

That has helped propel average retirement account balances to record levels, surpassing even the previous highs reached right before the pandemic.

Got Vaccinated? Here’s All The Free Stuff You Can Get

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After surviving a fear-filled year of the Covid-19 pandemic, getting vaccinated is a cause for celebration. As Covid-19 vaccines become more readily available, companies want to reward Americans who’ve been vaccinated with special offers after getting their shots. CNN Business reports:

Budweiser

Now through May 16, or while supplies last, Budweiser is giving a free beer to anyone 21 years old and up — who provide their proof of vaccination on ABeerOnBud.com. Bud fans first have to first register at the company’s mycooler.com website.

Krispy Kreme

You can get one free glazed doughnut every day if you take your vaccination card to any Krispy Kreme location in the US, the company said in a press release. The card must show one or two shots of any Covid-19 vaccine to qualify, and the offer must be redeemed in store. And no, you don’t need to purchase anything to get your daily free doughnut.

Staples and Office Depot

Staples and Office Depot want vaccinated Americans to keep their vaccination record cards in good condition. So the office supply companies are offering free laminating services for those completed Covid-19 vaccination cards. A spokesperson for Staples told CNN that the service is available at all Staples locations in the US and currently has no end date.

White Castle

Between April 22 and May 31, burger chain White Castle is giving a free dessert-on-a-stick to anyone with proof they have received a Covid vaccine, according to the company. White Castle offers four versions of the dessert on a stick: Gooey Buttercake-on-a-Stick, Fudge Dipped Brownie-on-a-Stick, Fudge Dipped Cheesecake-on-a-Stick and, as of earlier this month, its Birthday Cake-on-a-Stick in honor of the company’s centennial this year. No other purchase is necessary.

How One Man Lost $20 Billion In Two Days

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Before he lost it all—all $20 billion—Bill Hwang was the greatest trader you’d never heard of. Then he lost it all in two days. Bloomberg reports:

Starting in 2013, he parlayed more than $200 million left over from his shuttered hedge fund into a mind-boggling fortune by betting on stocks. Had he folded his hand in early March and cashed in, Hwang, 57, would have stood out among the world’s billionaires… At its peak, Hwang’s wealth briefly eclipsed $30 billion…

Hwang used swaps, a type of derivative that gives an investor exposure to the gains or losses in an underlying asset without owning it directly. This concealed both his identity and the size of his positions. Even the firms that financed his investments couldn’t see the big picture. That’s why on Friday, March 26, when investors around the world learned that a company called Archegos had defaulted on loans used to build a staggering $100 billion portfolio, the first question was, “Who on earth is Bill Hwang?”

Because he was using borrowed money and levering up his bets fivefold, Hwang’s collapse left a trail of destruction. Banks dumped his holdings, savaging stock prices. Credit Suisse Group AG, one of Hwang’s lenders, lost $4.7 billion; several top executives, including the head of investment banking, have been forced out. Nomura Holdings Inc. faces a loss of about $2 billion… On March 25, when Hwang’s financiers were finally able to compare notes, it became clear that his trading strategy was strikingly simple. Archegos appears to have plowed most of the money it borrowed into a handful of stocks — ViacomCBS, GSX Techedu, and Shopify among them. This was no arbitrage on collateralized bundles of obscure financial contracts. Hwang invested the Tiger way, using deep fundamental analysis to find promising stocks, and he built a highly concentrated portfolio. The denizens of Reddit’s WallStreetBets day trading on Robinhood can do almost the same thing, riding such popular themes as cord cutting, virtual education, and online shopping. Only no brokerage will extend them anywhere near the amount of leverage billionaires get…

People familiar with Archegos say the firm steadily ramped up its leverage. Initially that meant about “2x,” or $1 million borrowed for every $1 million of capital. By late March the leverage was 5x or more. Raising money to invest in streaming made sense. Or so it seemed in the ViacomCBS C-suite. Instead, the stock tanked 9% on Tuesday and 23% on Wednesday. Hwang’s bets suddenly went haywire, jeopardizing his swap agreements…

Hwang, say people with swaps experience, likely had borrowed roughly $85 million for every $20 million, investing $100 and setting aside $5 to post margin as needed. But the massive portfolio had cratered so quickly that its losses blew through that small buffer as well as his capital.

In One Year a Billion Tons of Food Got Wasted

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There is something that the average person can do to slow down climate change, and it can be accomplished without leaving the house. Don’t waste food. Bloomberg reports:

Some 931 million tons of it went to waste in 2019, according to the United Nations Environment Programme. Individual households were responsible for more than half of that, with the rest coming from retailers and the food service industry. New estimates show that about 17% of food available to consumers worldwide that year ended up being wasted. The matter is even more urgent when considered alongside another UN analysis that tracks the problem further up the supply chain, and shows 14% of food production is lost before it reaches stores. Waste is happening at every point, from the field to the dinner table.

Food waste and loss are responsible for as much as 10% of global emissions, according to the Intergovernmental Panel on Climate Change. If it were a country, this discard would rank third in the ranking of the world’s sources of greenhouse gases, after China and the U.S. Among the most effective climate solutions, non-profit Project Drawdown ranks cutting food waste ahead of moving to electric cars and switching to plant-based diets. Thursday’s UNEP report suggests the amount of food wasted by consumers could be about double the previous estimate. The analysis conducted by the UN’s Food and Agriculture Organization in 2011 relied on data from fewer countries.

How to Get Your Finance Back on Track

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Now that the pandemic is starting to come to an end and you are left with the question of how to get your finance back on track? You are not alone! Looking for easy ways to cut down your debt? Put some easy strategies and habits in place to improve your finance picture.

Before you start repaying debt, take a moment to identify the kind of debt you have — whether it’s credit card debt, student loan debt, mortgage debt or something else — and determine how much debt you have. Understanding the type and amounts of your loans can help you come up with a personalized plan for debt payoff.

Here are 10 ways to pay off debt:

  • Create a budget. Pay off the most expensive debt first.
  • Pay more than the minimum balance.
  • Take advantage of balance transfers.
  • Halt your credit card spending.
  • Put work bonuses toward debt.
  • Delete credit card information from online stores.
  • Sell unwanted gifts and household items.
  • Refinance high interest rate loans.
  • Reward yourself when you reach milestones.

This is the easiest one for homeowners. Refinance your current mortgage and lower your monthly payments. It is like giving yourself a raise! If you could use an additional $200-$500 per month, this may be an option for you!

FCC Approves $50 Monthly Internet Subsidies for Low-Income Households During Pandemic

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The Federal Communications Commission has approved final rules for a new broadband subsidy program that could help struggling families pay for internet service during the pandemic. CNN reports:

The agency’s $3.2 billion Emergency Broadband Benefit Program provides eligible low-income households with up to a $50 per month credit on their internet bills through their provider until the end of the pandemic. In tribal areas, eligible households may receive up to $75 per month. The program also provides eligible households up to $100 off of one computer or tablet.

The congressionally created program is aimed at closing the digital divide, which has become painfully apparent over the past year as millions of Americans have been forced to work and learn remotely. Some have also raised concerns that the digital divide could affect access to the vaccine as signups typically happen online.

Losses To Romance Scams Reached a Record $304 Million in 2020

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The current COVID-19 pandemic and the subsequent stay-at-home and social distancing directives might have played a major role in romance scams losses reaching record levels in 2020, the US Federal Trade Commission said in a report last week. ZDNet reports:

Total losses were estimated at a record $304 million, up about 50% from 2019, with the average loss last year being estimated at $2,500 per individual.

“From 2016 to 2020, reported total dollar losses increased more than fourfold, and the number of reports nearly tripled,” the agency said.

The FTC believes that the 50% spike in extra losses recorded in 2020 can be attributed to the COVID-19 pandemic, which has limited people’s ability to meet in person and has forced more users towards using online long-distance and impersonal communications, such as dating apps.

In most cases, the ruse of these scams is that the targets of a romance scam have to send money back to the crooks.

Virtual Property Sells for $1.5M in Ether, Smashing NFT Record

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A piece of virtual land on blockchain marketplace and gaming platform Axie Infinity has just sold for a record-breaking sum in cryptocurrency. Coindesk reports:

At around 23:00 UTC on Monday, one of the platform’s newest community members, “Flying Falcon,” purchased the digital estate of nine adjacent Genesis blocks for 888.25 ether, roughly $1.5 million at the time.

The transaction marks the largest non-fungible token (NFT) transaction of all time, as tracked on-chain by crypto collectibles data site NonFungible. Formerly, the “Formula 1 Grand Prix de Monaco 2020 1A” NFT from F1 Delta Time held the record at $224,111 in ETH, the site told CoinDesk.

“As Genesis land plots are the rarest and best-positioned plots in Axie Infinity they were a natural fit for my thesis,” Flying Falcon told CoinDesk via email. “What we’re witnessing is a historic moment; the rise of digital nations with their own system of clearly delineated, irrevocable property rights.”

While the “epic 9” plot is by far the NFT sector’s largest sale to date, there are roughly three other plots going for much higher: from 100 to 10,000 ETH.

Making More Money Really Does Make People Happier, Study Says

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The old saying goes “money can’t buy happiness,” but a new study finds that’s not exactly true. Although previous studies find there’s a limit to how much a person’s income impacts their happiness, a researcher from the University of Pennsylvania says the sky’s the limit when it comes to money’s influence over well-being. Study Finds reports:

Killingsworth’s study examined nearly two million data points from over 33,000 people; each providing a moment-to-moment snapshot of their daily lives. Other studies on income and happiness concluded that money stops mattering at around $75,000. The results of the new study, however, reveal that rising income continues to affect the earner’s well-being even into the hundreds of thousands of dollars…

After calculating the well-being of each person in the study, Killingsworth compared the results to each participant’s income. According to a 2010 paper, experienced well-being plateaus when someone hits $75,000 in annual salary. The new results find that number may have to change.

“It’s a compelling possibility, the idea that money stops mattering above that point, at least for how people actually feel moment to moment,” the researcher says. “But when I looked across a wide range of income levels, I found that all forms of well-being continued to rise with income. I don’t see any sort of kink in the curve, an inflection point where money stops mattering. Instead, it keeps increasing.”

The Best States for Entrepreneurs in 2021

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Despite the events of the past year, 2021 is an ideal time to start a business, as the pandemic has caused people to flock to the online sphere. A study by The Pew Research Center reveals that 53% of Americans find the internet to be essential for them during the pandemic, while 34% find it “important, but not essential.” This statistic is proof that now is the time to build a company, as the increased internet traffic makes it easier to promote and advertise one’s goods or services.

Though current events make it a good idea to start a business venture, beginning entrepreneurs still need to put a lot of thought into how they want to build up their company. One of the most important things to consider, for instance, is where you’ll be basing your business. If you need some guidance in that department, read on, because we’ll be listing five of the best states to open a business in 2021.

California

Though California is notorious for having among the highest taxes in the country, it’s still a great place to start a company, be it a corporation or an LLC. For one, it’s filled with college towns where you’ll find plenty of talented people to hire. Plus, it’s a place where almost every type of business has an existing market, from restaurant businesses to entertainment companies. If you’re looking to start a technology business, then Silicon Valley is the place to be. There are tons of companies to learn from and experts to build a network with.

Texas

Texas has the country’s second-largest economy (next to California) and is the fourth highest in terms of the increase in small businesses, making it startup-friendly. The state also borders Mexico, giving business owners the option to hire bilingual staff. Finally, office rental fees and energy bills are considerably cheaper here than in the rest of the country, so fledgling businesses will have more resources to devote to growth.

Delaware

Delaware is an ideal state to open a business, given that it has no sales taxes. This applies whether the company is physically based in Delaware or outside. Plus, there are no corporate income taxes on goods or services. But what sets this state apart from the rest is its Chancery Court, a court dedicated to business entity cases. This makes it easier to enlist legal help and speeds up business-related court proceedings.

Florida

Next is Florida — a state that continually ranks among the most entrepreneur-friendly states in the country. And there’s a good reason for this. Entrepreneurs looking to start an LLC in the Florida have plenty to look forward to, such as a large and diverse pool of talent, excellent state infrastructure, and a rebounding economy. Key to the success of many Florida-based entrepreneurs is the business-friendly tax climate, too, as personal income is not taxed on the state level. This is especially beneficial for small entrepreneurs running LLCs or sole proprietorships. To add to that, Florida draws thousands of tourists yearly, providing more opportunities for you to make sales.

Nevada

Lastly, there’s Nevada, one of the most tax-friendly states in the country. It has no business income tax, franchise tax, gift tax, or personal income tax. This is because most of Nevada’s tax revenue comes from the casino and hospitality industries. This gives business owners the opportunity to devote most of their income to growing their company.

Those were five of the best states to start a business in 2021. Each one is beneficial to entrepreneurs in different ways, so make sure to do more research before making your decision. If you want to learn more, check out our List of the Most Tax-Friendly States article. It’ll give you an idea of how much your company will earn should you decide to start a business in a particular state.