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☆ Mega backdoor Roth conversions can boost tax-free growth — if you avoid these mistakes
▼ + stars: | 2024-06-06 | by ( Kate Dore | Cfp | ) www.cnbc.com time to read: +1 min

Mega backdoor Roth conversions can significantly boost tax-free retirement savings — but this maneuver is not available for all investors and mistakes are common, experts say. A mega backdoor Roth conversion involves after-tax 401(k) contributions, which are shifted to Roth accounts. The full 401(k) limit is $69,000 for 2024, including employee deferrals, employer matches, profit sharing and other deposits. Mega backdoor Roth conversions are "a great tool when used appropriately," but you need to know your goals first, said certified financial planner Jamie Clark, founder of Ruby Pebble Financial Planning in Seattle. More from Personal Finance:Mega backdoor Roth conversions can be a 'no brainer' for higher earners, expert saysWhy a five-day return to office is unlikely, Stanford economist saysHere's how 'spaving' could hurt your financesHere are some common mega backdoor Roth conversion mistakes and how to avoid them, according to experts.

Persons: Roth, deferrals, Jamie Clark, Stanford, Here's Organizations: Ruby, Financial, Finance, Mega Locations: Seattle

Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailWhy spaving is bad for your wallet"Spaving," or spending more to save more, is a pitfall that could have lasting consequences on American consumers. Though inflation is cooling as of May 2024, prices remain high. Americans also have less in savings than a decade ago. As retailers entice shoppers with promotions and deals, consumers should be cautious about shopping on impulse if its an item they don't need.

☆ Here's how 'spaving' could hurt your finances
▼ + stars: | 2024-06-04 | by ( Natalie Rice | ) www.cnbc.com time to read: 1 min

"Spaving," or spending more to save more, has become a dangerous habit for cash-strapped Americans amid elevated inflation and mounting debt. Though inflation eased in April, the consumer price index was still up 3.4% from a year prior. Despite higher prices, Americans continue to spend. To that point, credit card debt reached $1.12 trillion in the first quarter, according to a report from the Federal Reserve Bank of New York. 'Consumers are hyperreactive to deals'

Organizations: Federal Reserve Bank of New Locations: Federal Reserve Bank of New York

☆ Harvard fellow: CFPB's 'buy now, pay later' regulation isn't enough — nothing 'substantively changes'
▼ + stars: | 2024-06-03 | by ( Jessica Dickler | ) www.cnbc.com time to read: +1 min

Last month, the Consumer Financial Protection Bureau declared that buy now, pay later customers should have the same federal protections as users of credit cards. However, Marshall Lux, a fellow at the Mossavar-Rahmani Center for Business and Government at the Harvard Kennedy School who studies BNPL, says the government's latest guidance is already a few steps behind. In fact, major buy now, pay later providers already provide such safeguards for users. "We've got an industry that's moving at light speed and a regulatory process that takes time," Lux said. More from Personal Finance:25% of consumers recently used a buy now, pay later loanCould buy now, pay later loans affect your credit score?

Persons: Marshall Lux, BNPL, —, PayPal —, We've, Lux, Penny Lee Organizations: Consumer Financial, Bureau, Rahmani Center for Business, Government, Harvard Kennedy School, PayPal, Finance, Financial Technology Association, Zip

☆ Average consumer carries $6,218 in credit card debt, as more borrowers are falling behind on their payments
▼ + stars: | 2024-05-16 | by ( Jessica Dickler | ) www.cnbc.com time to read: +2 min

Americans now owe $1.12 trillion on their credit cards, the Federal Reserve Bank of New York reported Tuesday. Keeping up with credit card debt is getting more difficult. "Rent, when you have it, auto loans, utilities, these are all things consumers prioritize ahead of credit cards." As a result, credit card delinquency rates are higher across the board, the New York Fed and TransUnion found. Over the last year, roughly 8.9% of credit card balances transitioned into delinquency, the New York Fed reported.

Persons: Charlie Wise, TransUnion's, Young, Wise, TransUnion, Kassandra Martinchek Organizations: Federal Reserve Bank of New, New York Fed, Finance, Fed, Urban Institute Locations: TransUnion, Federal Reserve Bank of New York, , New

☆ Biden administration extends key deadline for student loan forgiveness
▼ + stars: | 2024-05-15 | by ( Annie Nova | ) www.cnbc.com time to read: +2 min

The U.S. Department of Education is giving borrowers more time to meet a key student loan forgiveness deadline. "The Department is working swiftly to ensure borrowers get credit for every month they've rightfully earned toward forgiveness," U.S. Borrowers pursuing the popular Public Service Loan Forgiveness program can also receive additional credit from the payment count adjustment, as long as they certify their qualifying employment for those months. The payment count adjustment is an attempt to rectify longstanding issues for student loan borrowers. The Consumer Financial Protection Bureau also found borrowers were needlessly steered into expensive forbearances, during which interest accrues and credit toward forgiveness is paused.

Persons: —, Biden, Education James Kvaal, weren't Organizations: U.S . Department of Education, Education, Finance, Public, Government, Office, Consumer Financial Locations: U.S, deferments

☆ Could your buy now, pay later loans affect your credit score? Here's what you need to know
▼ + stars: | 2024-05-10 | by ( Jessica Dickler | ) www.cnbc.com time to read: +4 min

But there's one place they're notable absent: your credit report. Earlier this year, Apple became the first major BNPL provider to start reporting all user account information to a credit reporting agency. Providers including AfterPay, Affirm and Klarna already report some loans to the credit bureaus and experts say more are likely to follow, paving the way for a consumer's BNPL history to factor into their credit history and ultimately their credit score. (One of the main aspects of a credit score comes down to your history of paying bills on time.) When BNPL credit reporting could sting

Persons: Klarna, Liz Pagel, BNPL, Wells, Tim Quinlan, Ethan Dornhelm, TransUnion's, Silvio Tavares, Tavares, Pagel Organizations: Apple, Adobe Analytics, CNBC, Finance Locations: TransUnion, Wells Fargo

☆ More home sellers are paying capital gains taxes — here’s how to reduce your bill
▼ + stars: | 2024-05-07 | by ( Kate Dore | Cfp | ) www.cnbc.com time to read: +1 min

More Americans are paying capital gains taxes on home sale profits amid soaring property values — but there are ways to reduce your bill, experts say. In 2023, nearly 8% of U.S. home sales yielded profits exceeding $500,000, compared to about 3% in 2019, according to an April report from real estate data firm CoreLogic. It's key for a special tax break for homeowners who make a profit when selling a primary residence. Married couples filing together can make up to $500,000 on the sale without owing capital gains taxes. "With the recent rise in home values, more sellers have been facing a capital gains tax hit," Quinones said.

Persons: Jaime Quinones, " Quinones Organizations: Finance, Stockade Wealth Management Locations: U.S, Marlboro , New Jersey

☆ Americans can't stop 'spaving' — here’s how to avoid this financial trap
▼ + stars: | 2024-05-06 | by ( Jessica Dickler | ) www.cnbc.com time to read: +1 min

Spending more to save more is an all-too common pitfall. But spending to save can lead to excessive buying habits and high-interest credit card debt if you aren't careful, according to consumer savings expert Andrea Woroch. ″'Spaving is us justifying our desire to buy more," said Brad Klontz, a Boulder, Colorado-based psychologist and certified financial planner. Yet, even as inflation and high interest rates squeeze budgets, consumers continue to fall for these financial traps. "We are just constantly spending more than we can afford and then we experience stress related to our financial health," Klontz said.

Persons: Andrea Woroch, Brad Klontz, Klontz, spaving Organizations: Finance, YMW Advisors, CNBC's Locations: Boulder , Colorado

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