Should You Upgrade Your Homeowners Insurance?

During the first year of the pandemic, many homeowners spent their downtime upgrading their homes. 2020 alone saw a three percent uptick in spending on home improvements – to the tune of nearly $420 billion nationwide. This included modifications for remote work, online schooling, and leisure activities at home.

Between remodeling, high inflation, and today's elevated real estate prices, it's important to review your homeowner's insurance policy to ensure it is up to date. Does it include enough coverage for recent upgrades to your home? Does it carry an inflation factor to ensure coverage is on par with more expensive building material costs and labor increases? Do you have coverage for ancillary factors, such as the cost of meeting local building ordinances or flood insurance for today’s extreme weather events?

Replacement vs. Actual Value

One term to check on your policy's declaration page is whether your coverage is determined by replacement cost or actual cash value. Replacement costs will pay for repairs to your home or replace your personal property (e.g., laptop, television) up to coverage limits, regardless of its current value. In other words, the policy will pay for a new computer even if your old one was three years old.

Actual cash value refers to a cash payout equal to the current value of your property. In other words, if your computer was three years old, you will receive the cash value of a three-year-old computer – which will not likely cover the cost of a new replacement.

Guaranteed Replacement

In lieu of upgrading your home's cost coverage each year, you might have the option to pay for a guaranteed replacement, which is an extra fee that ensures the policy will cover the entire cost to rebuild your home. Extended replacement cost coverage pays out a certain percentage above your policy's stated dwelling coverage limit if the cost to rebuild is higher than the face amount. For example, a policy with $200,000 coverage and 25 percent extended replacement coverage will pay up to $250,000 to rebuild your home.

Ordinance Coverage

Homeowners who live in older homes should consider adding ordinance coverage if it is not standard under their policy. Ordinance coverage pays for the cost to meet current building codes should you need to rebuild. These fees can be substantial and would have to be paid out-of-pocket if you don’t have this form of coverage. Note, too, that although guaranteed replacement cost coverage might offer a higher payout, that is only for the material and labor costs to rebuild – not local ordinance fees, licenses, or inspections.

Inflation Impact

As you review your current policy, note that the section labeled “Coverage A” represents the amount available to rebuild your home. It generally rises by two to three percent each year for basic cost-of-living increases. However, it is worth noting that building materials, such as lumber and steel, increased by 19 percent in 2021, and in June the general inflation rate increased to 9.1 percent, its highest level in more than 40 years.

Because rising home building costs, high inflation, and the increasing number of weather events have plagued the home insurance industry, policy premiums are starting to increase at a higher rate each year than in the past. In addition to higher costs due to supply chain disruptions and inflation, the home building industry is hampered by a lack of qualified workers – and experienced workers are demanding higher pay. This is yet another component that is factored into calculating insurance premiums. Basically, anything that would lead to a higher cost to repair your home will result in higher rates.

Insurance companies calculate your policy premiums by multiplying your home's replacement rate with your home's current value. Therefore, a combination of higher building costs and higher real estate values have contributed to higher insurance premiums. Some states have set an annual percentage cap on how much insurance companies can raise homeowner rates each year. However, given the increasing number of extreme weather events (e.g., storm surges, wildfires) in recent years, state legislators also have increased those rate caps so that insurers have the latitude to cover excess payouts. Note that rate increases vary by geographical area and are based on local weather activity, labor costs, and building supplies.

Some insurance policies offer an inflation guard, which automatically increases coverage limits to match inflation rates when the policy is renewed.

Flood Damage

Be aware that homeowners insurance does not cover flood damage. Mortgage lenders require homes located in government-designated Special Flood Hazard Areas (SFHA) to purchase a separate flood insurance policy. However, we have seen inland and even metropolitan areas that are not located in flood zones devastated by the effects of storm surges following hurricanes. Homeowners who live in these higher-risk areas should consider purchasing a separate flood insurance policy as well. 

How to Determine Partnership Basis, Inside and Out

According to the Internal Revenue Service, the 2019 tax year saw more than 25 million partners comprising nearly four million tax returns filed by partnerships 2019. With many concerns necessary for navigating the U.S. tax code, including filing annual returns, one important consideration for partnerships and their partners is how to calculate tax liability. To determine how much they profit or lose on their investment, there must be an accurate calculation of adjusted cost basis via outside cost and inside cost basis.

According to the Internal Revenue Code (IRC), one aspect of Section 754 details how the tax basis of partnership assets is handled. When partnerships change, or when there are changes in partnership interest, it helps to rebalance the basis of the business entity's property. This entails defining and calculating both the outside cost basis and the inside cost basis. 

Understanding Outside Cost Basis

Outside cost basis refers to the percentage of interest each partner owns in a partnership. For example, if three partners own a partnership and each partner contributes $200,000, this establishes their outside cost basis. Recording what each initial partner contributes to the partnership is essential to determine their tax basis, including whether they’ve established a loss or gain, and therefore their tax obligations.

Understanding Inside Cost Basis

As the IRC explains it, “Inside basis refers to a partnership's basis in its assets.” One way to look at it is if three partners bought an asset for $600,000, each contributing $200,000 (symbolizing their inside cost basis), their respective inside basis in that particular asset would be $200,000.

When to Consider a Section 754 Election

It’s important to distinguish that partnerships adding or selling partnership interests must consider how such changes impact owners’ tax basis. By making a Section 754 election, partnerships can adjust the cost basis for new partners to provide an accurate accounting of profits (or losses). Assume five partners contributed $200,000 to a partnership and bought an asset for $1 million. A year later, the asset appreciated to $1.3 million. The outside basis is $200,000 (per partner) and the inside basis is $1 million.

Assume the asset appreciates to $1.3 million and one of the original five partners wants to cash out and sell their portion to a new, independent partner for $260,000. The original partner must pay taxes on the appreciation of $60,000 when exiting the partnership. Assume three months later, the asset is sold at the same price of $1.3 million with no Section 754 election. The four original partners are faced with a taxable gain of $60,000 each ($1.3 million selling price Р$1 million inside basis) / 5 partners = $300,000 profit / 5 partners). However, despite the new partner’s outside basis of $260,000, they would face the same $60,000 tax liability.

However, if a partnership chose to elect its partnership to Section 754, the new partner’s tax basis is “stepped up” to $260,000 instead of remaining at the original partner's basis of $200,000. The new partner’s inside cost basis will remain at $200,000, requiring no adjustment. However, the new partner now has an outside basis of $260,000 – the amount the partnership interest was sold for from the original partner to the new partner.

While each business arrangement is unique, for partnerships that see their assets regularly increase in value and experience frequent changes in partners, it could make sense to go with a Section 754 election.

Recent Trends in Long-Term Care Insurance

Long-term care (LTC) is associated with the elderly for good reason. Over the past 50 years, life expectancy has increased significantly and is therefore something all families should be prepared to address. Even though we may live to a ripe old age, that doesn't mean we will be healthy or able to live independently. Most people develop one or more chronic conditions that require living assistance – and many live with that ailment for years. Conditions such as arthritis, joint and muscle deterioration, or back pain often lead to chronic disability, making it difficult to impossible to take care of your own physical and lifestyle needs. Among even healthy seniors, about half of people age 80 and older experience some form of dementia or cognitive impairment.

Most LTC insurance (LTCi) contracts require that a policy owner seeking LTC no longer be able to perform at least two of the basic activities of daily living (ADL), which include dressing, bathing, toileting, feeding, and moving without assistance. However, before getting to that stage, many people may live for years needing help with domestic ADLs, such as preparing meals, paying bills, shopping, attending appointments, etc.

New Criteria for LTC Insurance

An unfortunate influence of the pandemic is that some LTC insurance carriers now require an in-person medical exam as part of the application process. In the past, underwriting generally involved a telephone interview, a completed questionnaire, and a medical records review. These days, in addition to an exam, issuers have increased the number of pre-existing conditions that are excluded from coverage. Furthermore, insurers are declining more applications for medical reasons. There is preliminary data that suggests more LTCi applications are declined, or higher premiums are charged, in geographical areas where populations have persistently higher rates of serious COVID-19 infections. Not surprisingly, these areas are generally correlated with lower vaccine rates.


New Policy Options

Even before the pandemic, LTCi sales were on the decline, and many insurers had exited the market. This is because, with longer life expectancies, carriers increased premiums to cover the financial risk. This priced many policies out of range for most households. In recent years, the life insurance industry has found a strong market in sales of hybrid policies, which guarantee benefits one way or another. For example, a contract might include a rider that allows the policy owner to use the future death benefit in the present to pay for LTC expenses while she is still alive. If she doesn't need the money, her beneficiaries will receive the value when she dies. Another benefit of hybrid policies is that they guarantee premiums will not increase. In many cases, a policy can be purchased with a single lump sum.


New Focus for LTC: Live at Home

Apart from exploring new ways to pay for long-term care, there is political interest in finding ways to provide LTC more efficiently than in the past. For perspective, consider that the current U.S. system of placing Medicaid recipients in nursing home facilities proved to be one of the most vulnerable components of the pandemic. As of February 2021, more than 170,000 residents in long-term care facilities had died due to the coronavirus.


Various public agencies and non-government organizations (NGOs) are looking at new paradigms for caregiving as an alternative to high-volume residencies to minimize the risk of disease contagion. Some recent proposals include the following:


  • Enhance current public programs that support independent living [e.g., Original Medicare, Medicare Advantage (MA) plans, and Special Needs Plans (SNPs)] with integrated benefits such as wellness care, behavioral healthcare, case management, home-delivered meals, transportation, and adult daycare services.
  • Allow Medicaid‚Äôs long-term services and supports (LTSS) programs to reimburse long-term care expenses at home and for community-based services.
  • Expand efforts already originated in a handful of states (e.g., Illinois, Michigan, Minnesota, Washington) for state-sponsored, long-term care insurance plans.
  • Consider building on state initiatives such as California‚Äôs Master Plan for Aging, which includes plans to:
    • Create community housing solutions that are age-, disability- and dementia-friendly, as well as climate- and disaster-prepared.
    • Improve the quality of life for the elderly and disabled by presenting opportunities for work, volunteering, engagement, and leadership regardless of age or disability. The purpose of this initiative is to reduce isolation, discrimination, abuse, neglect, and exploitation.
    • Generate up to 1 million highly-qualified, well-paid caregiving jobs.
    • Improve financial security for the elderly population by making long-term care affordable.
  • Reimagine nursing homes using a continuum of care housing model designed for 8 to 10 residents with integrated staffing.


The current trend in the caregiving industry is to help seniors be able to live at home for as long as possible. In many cases, this increases the burden on families. Since some people have to leave the workforce to care for family members, this hampers economic growth and tax revenues that could be used to fund better options. While LTC insurance remains expensive, potential buyers must be aware that most policies pay out benefits regardless of where care is bestowed, including nursing homes, assisted living facilities, the insured's home, or even the home of the insured’s family member.

How to Increase After-Tax Returns on Investments

Earnings is all about how much you keep after taxes – not what you bring in from your job, a business, or investments. While it is always great to see fabulous investment gains, the only financial metric that really matters is what is in your bank account at the end of the day. One of the ways you can influence this is by minimizing the taxes you pay on your investments.

Unfortunately, many people do not think about how taxes impact their investment returns until near the end of the year; however, you should act all year round. Taking part in investment tax planning throughout the year will give you opportunities to keep more of what you earn. Here are some rules and strategies to keep in mind.

Know When to Take Your Losses

Psychologically, many investors are averse to taking losses, holding out to “make their money back.” Instead of emotion, logic and investment acumen needs to be applied here. If an investment does not have a fundamental reason to turn around, then you are better off selling it and taking a tax loss.

Losses reduce taxes on either your capital gains for the year or, when losses exceed gains, up to $3,000 on other income. Excess losses can be carried forward to future years. Plus, you will have the proceeds to reinvest in something more likely to produce a return.

Let Winners Run

Unlike long-term capital gains, short-term capital gains are taxed as ordinary income. This means your marginal income tax rate (the highest rate applied to you) can impact your investment gains.

While you should not let the tax tail wag the investment dog, ideally you want to hold a winning investment for at least a year and a day to benefit from long-term capital gains tax treatment. This means you will pay only a 20 percent maximum tax versus whatever your marginal rate is.

As with losses, the fundamentals of the investment are key. Therefore you should not sell a holding if you think the gains are at risk just to save on taxes. If you believe in the investment for the long term, then holding out for preferred capital gains treatment can be a clever idea.

Give the Gift of Appreciation

Making charitable donations you would not otherwise give is generally not a viable tax strategy. However, if you are already charitably inclined, then consider donating stock or mutual funds instead of cash.

When you donate property such as stocks, your charitable deduction is based on the fair market value of the asset on the date of the gift. It is much better to do this than donate cash.

For example, if you have a stock you purchased for $35 and it is now worth $135 when you donate it you will receive a charitable deduction of $135. If you were to sell the stock first, you would have to pay tax on the $100 gains and then have only $103 to donate in cash – assuming you are in the 32 percent tax bracket. The only winner in this situation is the IRS; both you and the charity lose. This is because the charity is excluded from paying capital gains taxes on the appreciation that occurred while you owned the asset.

Hold Until You Die

This strategy does not benefit you directly, but rather your heirs. When someone inherits an asset such as real estate, stocks, bonds, mutual funds, etc., the cost basis of the asset is reset to the fair market value at the date of death.

This means that if you have stock in company XYZ that you bought for $50 and now it is worth $500, you would pay tax on the gain of $450 per share. However, your heir would pay $0 if he sold it on the day you died. If your beneficiary continues to hold the stock, the benefit still applies as his cost basis in the stock of XYZ would reset to $500, so he will pay taxes only on gains over that amount.


While you should never cheat on your taxes or do anything unethical, it is foolish to pay any more than is legally necessary to the IRS. Engage in investment tax planning year-round and you may see better after-tax returns and more money in your bank account.

Understanding Free Cash Flow

Understanding how cash flow is measured and analyzed is an important step for businesses. Business owners should constantly monitor and adjust their operations to increase the chances of becoming and staying cash flow positive.

JP Morgan Chase & Co. (JPM) monitors small business activity and presents some sobering statistics for businesses' cash flow challenges. For a median small business, JPM has found the middle amount of daily cash outflows to be $374 and average daily cash inflows to be $381. The middle statistics for small businesses hold an average daily cash balance of $12,100 and an average of 27 cash buffer days in reserve.

Defining Free Cash Flow to Equity

The Free Cash Flow to Equity (FCFE) calculation measures how much money a company produces that can be dispersed to equity holders. One way to determine this figure is to subtract Capital Expenditures from Cash from Operations and then add Net Debt Issued to the remaining figure.

FCFE = Money from Operations – Capital Expenditures + Net Debt Issued

Interpreting the FCFE's Results

This metric helps businesses, investors, and professional financial experts determine how much money is available for a business' disbursement of dividends and/or share buybacks. The more easily dividends and share buybacks are available via a better FCFE, the better a company is performing financially.

Even though the FCFE can tell how much shareholders may receive, there is no requirement that any of that amount be paid to shareholders. This valuation is preferred for companies that do not pay a dividend. One alternate source of funding buybacks or dividends is through retained earnings from past quarters.

Free Cash Flow to the Firm (FCFF)

Looking at how well a business runs, this calculation examines a company's cash flow health once taxes, investments, depreciation, and working capital are deducted, along with factoring in costs for current and long-term assets. It evaluates how much money the business could disburse to equity and debtholders once the company satisfies its financial obligations.

A company’s FCFF shows how much it has available to issue dividends, buy back shares, or satisfy debt obligations. If the FCFF is negative, there is no consideration for investors, as the business cannot meet existing bills and capital expenditures. When a negative result is found, there is a reason to see if and why there's not enough revenue. Interested parties should consider f it is a short-term need or if the business model needs to be re-tooled.

How FCFF is Calculated

Free cash flow to the firm can be calculated with the following formula:

FCFF = Operating Cash Flow + [Interest Expense √ó (1 – Tax Rate)] – Capital Expenditures

Putting FCFF in Perspective

FCFF must be taken as a part of the holistic analysis, whether it is an investor or the business itself analyzing numbers. If a business is reporting high FCFF figures, an analysis must be taken to ensure long-term investment in business structures, cars/trucks, tooling, and business development are accurately reported. If businesses institute collection protocols sooner than standard, run low inventories or extend satisfying their own financial obligation, it can lower what a business owes and revise its working capital numbers – but that is generally temporary.

With cash flow's impact on a business' operation so integral, understanding how it is calculated is the first step to making smarter operational and investment decisions.

What Are NFTs and How Can Businesses Benefit?

Non-fungible tokens (NFTs) are rising in demand, and some brands are already generating great results in their campaigns and providing a unique experience to customers. As the hype around NFTs continues, businesses need to understand how they can benefit.  

What is an NFT

An NFT is a valuable digital asset created using blockchain. Unlike cryptocurrencies, NFTs are not mutually interchangeable as each NFT represents a different asset with a different value. Hence, an NFT verifies the authenticity of a non-fungible asset. This means that the purchaser of the asset/product can only use a product. Unlike other digital products, an NFT can't be duplicated and sold. This is because the non-fungible asset is made into a token with a digital certificate of ownership, creating authenticity and credibility. NFTs could include videos, music, physical products, services, documents, artwork, and even memes.

A non-fungible asset's value depends on various factors, such as underlying value, ownership history, perception of the buyer, future value, etc.

How NFTs Have Been Used

So far, some industries are already reaping benefits from NFTs. Various cases of NFTs can be found in gaming, music, fashion, sports, and virtual real estate.

The growth of NFTs has been attributed to the fact that humans like to collect things, and since NFTs are designed to be scarce digital assets, this contributes to the high prices. According to research conducted in March 2021 by Morning Consult, a global decision intelligence company, about half of the people who identified themselves as avid physical collectors were interested in NFTs. In addition, users have more control over the asset bought because it cannot be used in any other way or duplicated, making it more valuable.

It might not be obvious to most when NFTs are worth an investment. However, looking at NFTs that have already been sold can present an opportunity that businesses should not ignore. For instance, the first tweet by Twitter CEO Jack Dorsey was sold for over $2.9 million in March 2022. The Nike brand also has been making headlines with its virtual sneakers, with one selling at $134,000.

With such news making the headlines, businesses may wonder how they can benefit from NFTs. 

How Can a Business Benefit from NFTs?

Businesses still hesitant about adopting new technologies should start considering creating NFTs that align with their brand image. Below are some ways in which a business can benefit:

1. Brand Visibility

Aside from digital marketing, NFTs provide another way businesses and corporations can drive attention to their brand. For instance, by creating a digital version of your products, you expose it to NFT enthusiasts, some of who might not be aware of your products. NFTs also can be incorporated as part of your brand storytelling, creating unique experiences for your customers, consequently increasing consumer engagements.

2. Authenticity

Many businesses undergo massive losses of revenue due to counterfeit products. With NFTs, businesses can ascertain the authenticity of their products and services. A digital certificate is issued with every transaction and a record is kept on the blockchain. A customer can check the authenticity since the blockchain can be traced to the original seller.

3. Additional Revenue Stream

Businesses can use NFTs as an additional source of income by selling digital forms of their products or services. One way to do this is by creating an early access opportunity before the official product launches, creating a buzz and ensuring the NFT value will rise.

4. Customer Loyalty Program

The versatile nature of NFTs makes them ideal for use in loyalty programs. The tokens can be used as medals for loyal clients or as membership tokens.

5. Prevent Ticket Scams

Many people fall victim to online ticket scams where they buy fake discounted tickets or duplicate tickets of an original event ticket. The money collected doesn't go to the business, which also affects the event organizers. Customers also risk their credit card information being stolen by scammers. However, turning a ticket into an NFT makes it easy to verify its authenticity and even prevents ticket black markets.

6. Managing Supply Chain

NFTs are positively disrupting the supply chain. With the use of blockchain technology, it's now easy to trace the entire process of a product lifecycle, from raw material, transportation, manufacturing, and distribution up to the end consumer. Hence, businesses interested in improving transparency and accountability can embrace NFTs to automate their supply chain.


NFT technology is relatively new, and its practical use is still limited. However, the fact that people are willing to spend on them is reason enough why any business should consider leveraging NFTs in its marketing strategies to help boost brand engagement and drive sales. 

How Will the Federal Reserve’s Quantitative Tightening Impact Markets?

Starting June 1, the Fed began reducing its balance sheet holdings of U.S. Treasuries by $30 billion a month for three months. Thereafter, it will double its reduction of U.S. Treasuries by $60 billion per month beginning in the fourth month. For its mortgage-backed securities, the first three months will see $17.5 billion roll off its balance sheet. Starting in the fourth month of the program, this cap will increase to $35 billion per month. As its dual mandate is to both maintain employment and a stable rate of inflation, this is another way the Fed is implementing its monetary policy to put the brakes on inflation and reign in out-of-control demand with limited supply. How will the Fed’s unwinding of its balance sheet impact markets for the rest of 2022? 

As compared to quantitative easing (QE), where the Fed bought U.S. Treasuries and mortgage-backed securities to foster more demand for U.S. Treasuries and lower bond yields, quantitative tightening (QT) is the opposite. According to the Federal Reserve Bank of St. Louis, QT is the reverse type of policy that aims to unwind holdings on the Fed's balance sheet. To tame inflation, QT removes liquidity from economic institutions and raises rates for long-dated assets. 

In response to the COVID-19 pandemic, the Fed bought U.S. Treasury securities and agency mortgage-back securities (MBS) again in March 2020 to provide stability by maintaining a source of easily accessible credit for consumers and business owners. The Fed bought $80 billion of Treasury securities and $40 billion of MBS per month. The Fed's balance sheet grew from $3.9 trillion (March 2020) to $8.5 trillion (May 2022). Looking at it from a percentage of GDP, it increased from 18 percent to 35 percent. When QT is in full force, it is expected to lower the Fed's balance sheet by at least $1.1 trillion annualized. Over a three-year timeframe, it is expected to remove about $3 trillion over 36 months. 

When it comes to the process of QT, it is important to understand how it works and impacts the overall market dynamics. When U.S. Treasuries and mortgage-backed securities mature, the respective issuing agency pays them off and the Fed receives payment. Unlike QE where the proceeds were reinvested, the proceeds will not be reinvested during QT and the Fed's balance sheet will fall in size.  

When it comes to global central banks implementing their own versions of QT, it is estimated that as much as $2 trillion will be removed from markets over the next 12 months. Looking at the Fed alone, it is aiming to reduce $1 trillion or 11 percent of its holdings from the balance sheet over the next year. If QT continues through 2024, its holdings will drop from 37 percent of GDP to 20 percent. With the Fed's balance sheet containing almost $9 trillion and inflation being 8.5 percent of the current CPI reading, this pace is higher because the last time it conducted QT, the Fed’s balance sheet held $4.5 trillion in assets with a CPI of 2.75 percent. 

Looking at potential scenarios of QT outcomes, the Fed has published three respective impacts on the Fed's policy rate. The Baseline scenario, or following what began on June 1, would lead to what's effectively a policy rate increase of 56 basis points. This is compared to a “no-runoff scenario,” leaving the Fed's balance sheet with another $2.1 trillion in Q3 of 2024, whereby there is no QT in place. Looking at the full-runoff scenario, it would let $0.8 trillion roll off the Fed's balance sheet by Q3 of 2024, necessitating a nine-basis point drop in the policy rate to offset the balance sheet's negative impact on the macroeconomy. 

When the pandemic struck in March 2020, the Fed Funds rate was cut to between 0 percent and 0.25 percent. On Jan 26, 2022, the FOMC maintained its target range for the federal funds rate at 0 percent to 0.25 percent. Fast forward to June 15, 2022: The FOMC raised its target range for the federal funds rate to between 1.5 percent and 1.75 percent. Depending on the evolving economic data surrounding inflation, the Fed appears willing to further adjust its target range. It is important to explore how the federal funds rate has led the market to interpret asset purchasing or unwinding actions by the Fed. 

During 2017 and 2018, the FOMC increased the federal funds rate by 175 basis points, bringing it to approximately 2.25 percent. St. Louis Fed President Jim Bullard argued that once the federal funds rate is north of zero, be it QE or QT, how the balance sheet grows or shrinks has little say on how the Fed will steer its monetary policy. 

While the economy is in uncharted territory due to its emergence from the COVID-19 pandemic and evolving monetary policy, only time will tell how much of an effect QT will have on the U.S. and global markets.

Top Side Hustles

In our current economy, or anytime actually, it can’t hurt to have a side hustle to bring in extra cash. Some of these options can be quite lucrative, but like everything, it takes a little work to create a steady income stream. However, with a little pre-planning, you can do it. Let’s take a look.

Become a Tutor

Are you a math whiz? A wordsmith? History nut? Whatever your specialty, you can earn between $10 and $75 an hour. You might vary your price based on whether you’re tutoring at the high school, college, or adult education level. You can conduct your sessions online or in person—totally up to you and your comfort level. All you have to do is create a lesson plan, then spread the word on social media, contact your local high schools and universities, or tack a notice near a central location such as a local coffee shop. When you’re sharing your knowledge and helping others, it might not feel like work at all.

Deliver Groceries with Instacart

If you haven't heard of this, you might have seen people in grocery stores with their carts stuffed with brown paper bags full of items, list in hand – these are most likely Instacart workers. In sum, this gig is a same-day grocery delivery app. You shop for other folks; you don't have to pay out-of-pocket when you're at the store, and you can start earning money the very first week. Oh, and you get tips. According to, you can make anywhere from $200 to $1,000 a week. Pretty easy and cool, right?

Rent an Extra Room Through Airbnb

While this might require some prep like buying extra towels and toiletries, as well as communicating with customers, you can make a lot in the long run. It might take a couple of months to get up and running, but you can bring in around 7 percent to 12 percent of your property value per year.

Help with Finances

If you have a background in accounting or finance, you might start up a business doing someone's books, taxes, or other services that have to do with money and/or budgeting. You can make from $20 to $100 an hour. Be sure to check with your city and state to find out what licenses and certifications you need.

Walk Dogs

Yes, dog walking can bring in more than you think. And you’ve probably seen these hearty souls on the sidewalks, sometimes with more than one furry friend in tow. If you live in a big city, there’s ample opportunity to make this work: you can make between $10 and $100 per day. And this is just a ballpark estimate. Plus, you’ll get your steps in. It’s healthy both fiscally and physically.

Write Resumes and Cover Letters

With all the job seekers out there, you could make a good chunk of change doing this. And you don't necessarily need to be a writer. If you have a background in HR and recruitment or you've worked as a hiring manager, you'll be ready to go. Hesitant about all that punctuation? Check out This app will help you navigate all those writing questions you might have that inevitably come up when you’re composing. The average you might earn is somewhere in the neighborhood of $500 or more.

One Thing to Note

If you make more than $600, you must report it to the IRS. If you see that your side hustle is booming, if you start making thousands or tens of thousands of dollars a year, you might want to start a business. You could enjoy additional tax write-off opportunities so you can keep more of what you earn.

So start exploring, hang those shingles and watch the extra dough come rolling in.


How Social Security Benefits Are Affected by Earned Income

Thanks to the Great Resignation trend over the past year, there is a high availability of jobs. Therefore, now is a good time for retirees who would like to go back to work to ease into the job market. However, if you’ve already begun drawing Social Security benefits, you should understand how earning income will affect those payouts. 

First of all, you have two options if you’d like to stop receiving Social Security. One option is available only if you’ve been drawing benefits for a year or less. In this case, you may cancel your application; but be aware that you must repay all the benefits that you and your family have received to date. That includes spousal benefits and even Medicare premiums that were deducted from your payout. You will still be able to reapply for Social Security later. The second option is available only if you have reached full retirement age but have not yet turned 70 years old. In this case, you may request to have your Social Security payouts suspended. 

There are two benefits associated with these strategies: 1) foregoing Social Security income will likely reduce your tax bill, and 2) your Social Security benefits will start accruing again based on the delay and calculations that include your new wages. 

Alternatively, you may choose to continue receiving Social Security while you work, which could be important if your spouse is receiving benefits based on your earnings record. Under this scenario, a portion of your benefit may be withheld or even subjected to higher taxes. It all depends on how much you earn. If your annual income is $19,560 or less (2022), it won’t impact your Social Security benefits. 

Note that only wages from a job or self-employment count toward your Social Security income limit for withholding purposes. Distributions you receive from pensions, annuities, investment income, interest, veterans benefits, or other government or military retirement benefits are not considered earned income. 

Once your income totals more than $19,560, the impact depends on your age. If you have not yet reached “full retirement age,” Social Security will withhold $1 in benefits for every $2 you earn over the limit. 

During the year you reach full retirement age, your annual total earnings limit increases to $51,960 (2022) and the subsequent benefit reduction drops to $1 for every $3 you earn over that amount. They count only how much you've earned up to the month before your birthday – not what you end up earning in a whole year. Once you've reached full retirement age, it doesn't matter much how you earn, there will no longer be any withholding of benefits. 

Better yet, starting in January of the year after you turn full retirement age, regardless of whether you continue working or not, your Social Security benefit will increase to reflect any previously withheld benefits due to your income exceeding the limit. And if the years you subsequently worked rank among your 35 highest-earning years, your payout will increase even more to reflect a higher benefit calculation (since you paid FICA taxes on that income). 

Tax Considerations 

In the case of all beneficiaries, at least 15 percent of Social Security income is exempt from federal income taxes. Be aware, though, that for tax purposes, your reportable income includes half of your Social Security benefit plus all other forms of income, such as a job, pension, or investment income. If your total annual income is between $25,000 and $34,000, then as much as 50 percent of your Social Security benefit is taxable. If you earn more than $34,000 in a year, then up to 85 percent of your Social Security benefit is subject to taxes. 

This is a general overview of what happens to your Social Security benefits when mixed with earned income. There are additional details, so it’s a good idea to work with a Social Security expert to decide if you should cancel or suspend payouts and to understand how your income and tax situation may be impacted by going back to work. 

With that said, if your portfolio has taken a beating this year, you might want to stop investment distributions for now and give it time to grow. Fortunately, the United States is currently enjoying a robust job market in which highly experienced candidates can negotiate a flexible work schedule, job site, and higher salary, so it may be worth it to go back to work for another year or two to help secure your long-term retirement plans.

4 Common Depreciation Methods and Their Uses

Depreciation is the accounting concept that evaluates an asset's useful life. As the Internal Revenue Service (IRS) explains, depreciable property ‚Äì which could include equipment, structures, means of transportation, fixtures, etc. ‚Äì is examined to see how many years the purchase price can be averaged and ‚Äúdeducted from taxable income.‚Äù This is in contrast to “full expensing,” which allows companies to write off investments straight away. For dual-use property (personal and commercial), only the portion of property that's used for business may be depreciated. Property eligible for depreciation must (1) be owned by the business, (2) be used for business purposes/income-producing activity, and (3) have a determinable useful life.¬†

1. Straight Line Depreciation Method

This method of depreciation determines a constant amount to expense annually over the useful life of the property. It's calculated as follows, with the following example circumstances assumed:

 Machinery costing $50,000 with a life of 12 years and $2,500 in salvage value.

Annual Depreciation = (Cost – Salvage Value) / Useful life

= ($50,000 – $2,500) / 12

= $47,500 / 12

= $3,958.33


When implementing this method of depreciation, if the asset's useful life and salvage value is assumed incorrectly, it could skew results. For assets that become outdated prematurely and/or require higher maintenance costs toward the end of their useful life, this method can lead to improper results. 

2. Double Declining Balance Depreciation Method

This method, generally speaking, is double that of the straight-line rate.

Annual Depreciation Rate = (100% / Useful life of asset) x 2

Annual Depreciation Rate = (100% / 10) x 2 = 20%

Let's assume that property, plant, and equipment (PP&E) cost $75,000, will produce for 10 years, and have a salvage value of $6,000.

From there, we work to establish the Periodic Depreciation Expense (PDE)

PDE = Beginning Book Value x Rate of Depreciation

Using the formula for PDE, we get: $75,000 x 0.20 (20 percent) = $ 15,000 for the first year's depreciation expense.

Then, the first year's depreciation expense is subtracted from the item's beginning book value. Ending Book Value = $75,000 – $15,000 = $60,000

To determine each subsequent year's ending book value, the calculation begins with last year's ending book value minus the newly calculated annual depreciation expense.

Year 2 Calculation for Ending Book Value: $60,000 Р($60,000 x 0.20 = $12,000) = $48,000 


This method expenses a greater proportion in the earlier years compared to the later years. This is useful for assets that produce more for a business in their earlier years compared to later years. This method can help businesses depreciate items that lose value quickly, such as electronics, and similar items that become obsolete due to improving technology. It's not necessarily double or 200 percent of the straight-line rate. It could be more or less than double the straight-line rate. However, the double depreciation rate does remain constant over the depreciation process. 

3. Units of Production Depreciation Method

This method takes either the amount of discrete time utilized for production or the tally of items to be manufactured with the production equipment subject to depreciation. It's calculated as follows:

Depreciation Expense = [(Cost – Salvage value) / (Life in Number of Units)] x Number of Units Produced During Accounting Time Frame.

Let's assume a piece of equipment costs $100,000, has a projected lifetime production ability of 150 million widgets, and will salvage for $10,000. It's projected to create an output of 25 million widgets within the accounting year.

Depreciation Expense = [($100,000 – $10,000) / 150 million] x 25 million

= ($90,000 / 150 million) x 25 million

 = 0.0006 (unit) x 25 million

 = $15,000


This method can help businesses, such as manufacturers, that produce discrete items that can be counted and expensed per piece. Depreciation starts when the manufacturer begins to make items and stops when the unit has produced all of its life's items within a pre-defined time frame. 

4. Sum-of-the-Years Digits Depreciation Method

This type of depreciation is calculated as follows:

Remaining Life (RL) of an asset is divided by the sum of the years' digits (SYD) x Depreciation Base. The Depreciation Base = Cost – Salvage Value

Assuming there are equipment costs of $50,000, with a useful life of 12 years and a salvage value of $3,500. Depreciation Base = $50,000 – $3,500 = $46,500

RL = the remaining life of the asset. When the item starts running, it will have 12 years of remaining life. One year later, or 12 months after usage began, the asset will have 11 years remaining, and so on. For an item with 12 years of useful life, it will be “the sum of the years” or 1+2+3+4+5+6+7+8+9+10+11+12.

The first year of use or the item's Remaining Life will be 12 / 78 = 0.1538. Then 0.1538 x $46,500 = $7,153.85.

Year 2 would be calculated as 11 / 78 = 0.1410. Then 0.1410 X $46,500 = $6,557.69.


This method is another way to speed up the percentage of depreciation sooner, instead of toward the end of the asset's useful life. The longer the asset is used, the less utility the asset provides to the business. Therefore, it helps businesses take advantage of depreciation sooner. It's a trade-off for items that require more maintenance as time goes on, as the item's value drops inversely.


Depending on the type of business and what it produces or provides as a service, understanding how depreciation works can give an accurate picture of a company's finances and help with navigating tax laws efficiently.