If you’re not financially prepared to pay up, late fees or other charges can bury you deeper in debt. Circumstances can change over a matter of weeks through financial setbacks like unemployment, an unexpected bill, a family emergency or other events.

When you’re feeling the financial squeeze of those pay-in-four buy now, pay later plans — and possibly other debts — it’s important to create a plan to pay down balances.

Here are a few options to consider as you strategize your way out of debt.

1. Update your budget

Review your budget and trim unnecessary expenses or swap services for less costly alternatives. Cancel unused subscriptions, for example, or switch to a cheaper streaming service.

If you’re also struggling with credit card debt that may take three to five years to pay off, consider consulting an accredited nonprofit credit counseling agency about a debt management plan, which can consolidate some balances into a single low-interest payment. Note that accounts enrolled in the plan are typically required to be closed, which could affect your finances in the short term.

2. Change your payment due date

Some lenders like Klarna and Afterpay allow you to change the payment due date or request an extension.

Klarna customers using a pay-in-four loan can extend the due date of a payment for each order once by 14 days, according to the company’s website. Afterpay may provide more leeway, allowing changes to the payment due date up to six times per year in the app, according to Amanda Pires, a company spokesperson.

Lender policies may differ, so read the plan’s terms or ask the lender about your options.

3. Communicate with lenders about hardships

If a financial setback or emergency keeps you from making payments, the buy now, pay later lender may offer some relief.

Major buy now, pay later companies with hardship policies typically encourage you to contact customer service as soon as possible about hardships.

“Affirm users experiencing financial hardship can contact us through our help center so we can work with them to identify an available repayment option that best meets their personal needs,” Casey Becker, a company spokesperson, said via email.

Terms vary by lender.

4. Consider a balance transfer credit card

If you have good credit (a FICO score of 690 or higher), a few issuers may offer a 0% introductory annual percentage rate on a balance transfer credit card to be used to pay buy now, pay later debt. That might buy you some time if you’re struggling to meet a plan’s payment deadlines, but there are some things to know.

Balance transfer credit cards are designed to help you save on interest charges for a designated time frame, so they might not make sense for certain buy now, pay later plans that don’t charge interest to begin with. Plus, you can move a balance only as high as the card’s credit limit allows, and there’s typically a fee charged on the amount you transfer, usually between 3% and 5%. Compare potential buy now, pay later costs against these factors.

The process and terms will vary among the card issuers that allow this, so ask what to expect. Wells Fargo, for instance, may allow you to use a balance transfer to pay buy now, pay later debt.

“The most common practice is to transfer balances from another credit card issuer to their Wells Fargo account to save on interest,” Sarah DuBois, a Wells Fargo spokesperson, said via email. “If there is a creditor that is not technically considered a retail or bank card issuer, customers do have other options for how to take advantage of their balance transfer offer (i.e. using a balance transfer check that is generally issued with the offer).”

If a credit card issuer offers a balance transfer option in the form of a check, your ability to use it may also depend on the lender’s ability to accept that payment method.

5. Weigh the pros and cons of a personal loan

A personal loan can consolidate multiple debts into a fixed monthly payment with a low interest rate over a designated period. If the funds are sent to your bank account, it’s generally possible to use them to pay any creditors, including buy now, pay later lenders. A good credit score may qualify you for a lower interest rate.

But again, it’s not ideal to pay off debt with credit, so it’s important to calculate whether the proposed interest rate offers savings compared with any potential charges on buy now, pay later plans. If your buy now, pay later plan doesn’t charge interest or fees, paying it off with a personal loan may not be ideal. But it might be worth using the loan to consolidate other debts — if that can free up money to pay off buy now, pay later plans.

This article was written by NerdWallet and was originally published by The Associated Press. 

More From NerdWallet

The new schedule was a response to the thousands of emails pouring in, as people were anxious, confused and needed help making sense of their financial choices in a highly uncertain time.

Those early inquiries morphed into a different type of question than I had previously never received in the dozen years of hosting a personal finance show: Is this really how I want to live? To answer, I would walk listeners through a series of probing questions to help them understand the options that existed.

These conversations prompted me to write a book, The Great Money Reset, a “guide to getting real and building your best life,” which will be available on January 24. Over the next few weeks, I will be sharing snippets of the book to help you kick-start your personal transition, to break through whatever is holding you back and to help you thrive.

I open the book with a universal fact: To reset to a new place, you have to understand where you are today. In addition to tallying up what you have saved and any obligations that you have accumulated, you also need a detailed understanding of your spending habits.

I continue to be surprised at how many people discount the idea of focusing on consumption and/or are too ashamed about their spending habits to examine what’s really going on behind the behavior. Here’s an excerpt of one of my favorite chapters of The Great Money Reset:

“You might think you must blow your life savings to make a big change. Maybe not. People from all walks of life are rethinking their consumption habits. You can do the same, with an eye toward reducing expenses and directing those resources toward your dreams…

“There’s a powerful secret to achieving your dreams that I’ve been applying for some time, with considerable success. For the price of this book, I’m happy to let you in on it. It’s a behavioral strategy that’s simple, easy to apply, and guaranteed to work. Anyone can use it to feel more empowered financially, irrespective of where they live, how much they earn, or what they do for a living. So, are you ready? The secret to achieving your dreams is . . . spend less.

“Rather than arriving at ironclad judgments about any particular consumption choice, it’s most helpful simply to become more mindful of how we’re spending our hard-earned money and how it makes us feel.

“Uncovering our spending rules isn’t straightforward — it leads us into the complex netherworld that is our emotions. Here are some questions I recommend asking to help you understand your consumer behavior and the underlying psychology as completely as possible:

“Question #1: What do I really need in my life, and what do I only think I need?

“Many of us create rules premised on the idea that we require certain goods or services to be happy and healthy. We all must make purchases corresponding to the lower rungs of the psychologist Abraham Maslow’s famous hierarchy of needs — food, water, a safe place to live, heat, healthcare, and so on. When it comes to higher-order needs such as our need to feel connected to others or our need to be creative and feel self-actualized, our required purchases become less obvious.”

Jill Schlesinger, CFP, is a CBS News business analyst. A former options trader and CIO of an investment advisory firm, she welcomes comments and questions at askjill@jillonmoney.com. Check her website at www.jillonmoney.com.

Fidelity’s 2023 New Year’s Financial Resolutions Study found that two-thirds of respondents are considering a financial resolution for 2023, a share that has remained remarkably consistent over time.

So too have the top resolutions: save more money (39%), pay down debt (32%), and spend less money (28%). But “for the first time in the study’s 14-year history, more Americans plan to save money for short-term goals rather than long-term goals as part of their New Year’s resolution.”

The short-term vs. the long-term shift likely has much to do with Americans’ contending with inflation and the impact that the three years of pandemic have made on our lives. Of those planning a financial resolution for the new year, the vast majority (94%) say they’re approaching it differently given events of the last couple years, with nearly half “considering more conservative goals. Those making financial resolutions hope to achieve ‘greater peace of mind’ and ‘live a debt-free life.’”

To help out, I am refreshing my resolution advice of year’s past:

Track spending

The start of the year is an ideal time to review what’s coming in and more importantly, what’s going out. To track your cash flow, download a free app or use your bank’s app. The idea is to figure out where you stand now, how much money is available to help achieve your resolutions, and then you can create an actionable plan to fulfill them.

Replenish savings

Many have depleted their pandemic savings to contend with higher prices. That’s why the number one priority should be replenishing or funding an emergency reserve that can cover six to 12 months of your living expenses.

Unlike the previous decade, where savers earned paltry rates on their “safe money,” many high yield savings accounts are yielding roughly 3% and 6-month Treasury Bills are yielding about 4.6%. (You can compare savings rates at depositaccounts.com or bankrate.com.)

Establish an automatic transfer of a set amount of money from your checking to build this fund. You should also use this fund to hold the money necessary to fund any large expenses that will occur over the next 12 months.

Reduce credit card or other high interest debt

With the Fed continuing to hike rates, the cost of servicing debt is not going away any time soon. After funding your emergency reserve, redirect the automatic payments to accelerate your debt pay-down, chipping away at the highest interest debt first and working your way down.

Contribute to your retirement account, to the best of your ability

The IRS announced increases to the annual limit on contributions to work-based retirement plans (401(k), 403(b), 457), which will increase to $22,500 (catch-up contributions for those over 50 increase to $7,500). The IRA limit will increase to $6,500, but the over-50 catch-up remains at $1,000.

Rebalance your investment accounts

After three stellar years of investing, 2022 challenged every investor’s nerves. While it’s human nature to feel skittish after enduring the volatility and the pain, try to avoid guessing the highs and lows – or when to get in or out of a particular market.

Instead, go back to basics: determine your goals and create a plan to diversify your investments across different asset classes. If you haven’t done so lately, rebalance your accounts to make sure that the percentages are in line with your desired allocation.

Jill Schlesinger, CFP, is a CBS News business analyst. A former options trader and CIO of an investment advisory firm, she welcomes comments and questions at askjill@jillonmoney.com. Check her website at www.jillonmoney.com.

Temporary/transient inflation is so 2021

Remember in March of 2021, when Federal Reserve Chair Jerome Powell said that pandemic supply chain bottlenecks were the cause of surging prices? 2022 was a brutal reminder that prices can stay higher for longer than most expected. The Consumer Price Index peaked at 9.1% in June, before decelerating over the past five months. Through November, CPI was up 7.1% from a year ago.

Interest rates can rise fast

In January, the benchmark federal funds rate was close to zero and now stands at 4.25 to 4.5%. In March, the Fed began with a standard 0.25 percentage point increase, on its way to the most rapid pace of rate hikes in modern times, according to Charles Schwab.

That made the cost of borrowing soar, with credit card rates reaching record highs, auto loan rates jumping to the highest level in over a decade, and home equity lines of credit breaching 15-year highs.

Recession may be on the horizon, but not here yet

Although the economy shrank in the first half of the year, activity as measured by GDP, picked up in the third quarter, and is moderating in the fourth quarter. One reason that the economy is not wobbling even more is the job market, which is producing about 200,000 jobs per month, despite losses in sectors like tech, real estate, and media. With wages solid, particularly at the low end, and Americans sitting atop pandemic-era excess savings of $1.7 trillion, consumers closed out the year complaining, but still spending.

Housing is wilting, but not dead yet

Although the Fed does not control the rates on which mortgages are based, the trend of higher rates fed through to those markets as well, pushing 30-year loans to over 7%. “The year-to-date rise in mortgage rates has still stripped would-be homebuyers of one-third of their buying power,” according to Greg McBride of Bankrate, which has caused housing activity to slump. That said, prices are not cratering yet, but most expect them to drop in 2023.

Asset allocation and diversification couldn’t save you

It has been a brutal year for investors, as aggressive rate hikes by global central banks caused investors to dump both stocks and bonds. That said, over the long term, it’s awfully difficult when to get in and out of markets. Researchers at Vanguard summed it up: “From 1928 through 2021, there were more than 23,300 trading days in the U.S. stock market. Out of those, the 30 best trading days accounted for almost half of the market’s return.

Being out of the market at the wrong time is costly. And many of those best trading days were clustered closely with the worst days in the market, making precise timing nearly impossible.”

Sam Bankman-Fried is the Bernie Madoff of the Crypto era

The more you read about Sam Bankman-Fried (“SBF”), the CEO of the now bankrupt cryptocurrency exchange FTX, the more he looks like an old-fashioned scammer, like Bernie Madoff or P.T. Barnum.

The disheveled huckster now faces criminal and civil charges from the Department of Justice, the Securities and Exchange Commission, and the Commodity Futures Trading Commission. SBF attracted some of the most influential Silicon Valley venture capital, but new and complicated technologies, delivered by a “wizard” can lure even seasoned investors.

The best antidote? Ask a lot of questions and as always, don’t believe the hype.

Jill Schlesinger, CFP, is a CBS News business analyst. A former options trader and CIO of an investment advisory firm, she welcomes comments and questions at askjill@jillonmoney.com. Check her website at www.jillonmoney.com.

This week I am highlighting the wonks, who broke through the chatter and helped explain economic and market trends occurring in real time.

Guy Berger

As the economy reopened after the worst of the pandemic, something very weird happened to the U.S. labor market. All of the sudden, workers of all types were reconsidering their options. As analysts breathlessly recited the stats (the Job Openings and Labor Turnover Survey or “JOLTs” was ready for a closeup!), the term “Great Resignation” took hold.

Early in 2022, I spoke with LinkedIn principal economist, Guy Berger, who posited that millions of Americans were not quitting forever. Rather, they were finding new roles in different industries. He dubbed the trend “The Great Reshuffle.”

As soon as Berger laid out his case, I started hearing from people about the changes that he had described. Americans of all ages and all earning levels were rethinking their relationships with work. Some sought more consistent or fewer hours, others opted for lower levels of stress and quite a few used the pandemic as the springboard to start their own ventures. In addition to transitions among prime work age (25-54), Berger also correctly predicted that the pre-COVID trend of Baby Boomer retirement would accelerate.

James Mackintosh

Long before (OK, months in this case) politicians made Environmental, Social, and Governance (ESG) investing a wedge issue, James Mackintosh penned a stinging series in the Wall Street Journal, which exposed the flaws of ESG investing.

While reports from large firms and the consultants that support them (both of whom often were trying to market and sell ESG funds) touted higher returns and lower downside risk, Mackintosh pointed out that in many instances, time horizon matters. Just think of it this way: If you owned oil and gas companies from 2015-2019, returns were terrible, but amid the surge in commodity prices, these same companies saw profits (and their stock prices) soar.

This is not to say that Mackintosh thinks that environmental, social, and governance issues are not worthwhile, but his larger concern is that ESG investing “distracts everyone from the work that really needs to be done.” He adds: “Rather than vainly try to direct the flow of money to the right causes, it is simpler and far more effective to tax or regulate the things we as a society agree are bad and subsidize the things we think are good.”

Kathy Jones

As the bond market started to tank, I turned to one of the great explainers, Kathy Jones, the chief Fixed Income strategist at the Schwab Center for Financial Research.

Even when I spoke to her in May, Jones underscored that 2022 was likely to be an awful year for bond investors because the pandemic inflationary spike had prompted the Federal Reserve to raise interest rates. Jones explained that as interest rates rise, existing bonds lose some of their value because their yields become less attractive than those offered by new bonds. So, to entice an investor into buying your existing bond, you would need to sell it for less than you paid.

Even though 2022 would likely be the worst year on record for bonds, Jones saw a bright spot: 2022 would also be a watershed year for those who had bemoaned low income producing investment opportunities for the past several years. The steep rise in yields would be a salve in the future for those who were either purchasing new bonds or reinvesting into bond funds at lower levels.

Jill Schlesinger, CFP, is a CBS News business analyst. A former options trader and CIO of an investment advisory firm, she welcomes comments and questions at askjill@jillonmoney.com. Check her website at www.jillonmoney.com.

These authors, journalists, and filmmakers take what may seem mundane or complicated and bring it to life through engaging storytelling. Each year, I highlight those interviews that stuck with me throughout the year – and beyond.

Here are the standouts for 2022:

Daniel H. Pink

I first met Dan after he had written When: The Scientific Secrets of Perfect Timing. His research from the fields of psychology, biology, and economics, illustrated why the timing of certain decisions is more within our control than we would think.

In 2022, Pink followed up with The Power of Regret: How Looking Backward Moves Us Forward. In our conversation, we discussed the paradox of how we frame past experiences.

Pink calls it the At Leasts/If Onlys and it goes something like this: “‘I didn’t get that promotion, but at least I wasn’t fired’. At Leasts deliver comfort and consolation.” Contrast that sentiment with this one: “‘If only I’d taken a few more stretch assignments, I’d have gotten that promotion.’ If Onlys deliver discomfort and distress.” Why choose discomfort and distress over comfort and consolation?

Because doing so may allow us to dive deeper into and take accountability for our decision-making. It can also help us be more forgiving to ourselves and importantly, can help us make smarter decisions, perform better at work and school, and bring greater meaning to our lives.

Annie Duke

Duke is a data scientist-turned professional blackjack player-turned author of two books, Thinking in Bets and How to Decide.

In her most recent work, Quit: The Power of Knowing When to Walk Away, she tackles two opposing forces: grit and grace. In our high-powered, achievement-oriented culture, Duke notes that “grit is a virtue, quitting is a vice.”

She explores why quitting is seen as negative, when in fact quitting allows you to incorporate new information and make better decisions. “Having the option to quit is what will keep you from being paralyzed by uncertainty or being stuck forever in every decision you make.”

Duke underscores her thesis by citing cognitive biases which can help explain why people stick it out far too long, whether it’s a job, an investment, or even a relationship. “If you feel like you’ve got a close call between quitting and persevering, it’s likely that quitting is the better choice.”

Spencer Jakab

Perhaps you never really understood what the heck happened amid the pandemic “meme stock craze.” That was the period when investors used social platforms and discussion board sites like Reddit and Twitter to discuss and ultimately pile into companies like Gamestop and AMC Entertainment, ostensibly to punish short sellers – and stick it to the elites.

Lucky for you, Wall Street Journal columnist Jakab’s engaging book, The Revolution That Wasn’t: GameStop, Reddit, and the Fleecing of Small Investors, tells the story of the GameStop squeeze, and the surprising winners of a rigged game.

Far from democratizing the financial world and markets, Jakab shows that the ultimate winner was the inside Wall Street crowd that feasted on retail investors.

Abigail Disney

Activist and filmmaker Abigail Disney may have had a tough Thanksgiving.

In her documentary, The American Dream and Other Fairy Tales, she is pretty tough on the company that her father and uncle started decades ago. Disney interviewed Disneyland custodians over a two-year period (2018-2020), to shine a light on the disparity between workers, executives, and shareholders.

The film serves as interesting walk down memory lane of American capitalism.

Jill Schlesinger, CFP, is a CBS News business analyst. A former options trader and CIO of an investment advisory firm, she welcomes comments and questions at askjill@jillonmoney.com. Check her website at www.jillonmoney.com.

Jennifer Schulz, the new North American CEO of Costa Mesa-based Experian, would like to have an even deeper relationship with consumers at the same time improving the decision-making data that flows to the company’s main business clients – banks and lenders. She takes the place of Craig Boundy, who was promoted to Global Chief Operating Officer reporting to Brian Cassin, CEO of London-based Experian plc.

In recent years, Experian has been pioneering ways to help consumers navigate the complicated path to a loan, pay bills, or other financial services.

First, there was Boost, a program that allows people to improve credit scores by adding payment records to their profiles of previously untracked expenses such as utilities, phone companies and streaming services. And now there’s a way to get rent payment histories into credit reports.

The company’s new Go product enables those with no credit history to create their own Experian credit report even if they don’t have any loan or borrowing accounts.

And in July, Experian was one of three credit bureaus that took unpaid medical debts under $500 off consumers’ credit scores. These often disputed charges had been damaging credit histories for years.

Schulz, who came to Experian in 2013, isn’t satisfied. She looks across the world of consumer transactions and knows many of those dealings are not simple or stress-free processes.

She sees a rich field of opportunity in easing some of the most-dreaded monetary moves made by consumers. The key is a how-can-we-improve-that mindset that can break down old-school thinking.

“If we embrace change, we’re going to innovate,” she says. “We’re going to continue to focus on problems that need to be solved and put the energy and resource behind it. I have a lot of confidence around that.”

In her first interview as the company’s North American leader, Schulz outlined what will guide her goals to broaden credit access and simplify consumer transactions. The Q&A was edited for clarity and brevity.

Q. It’s hard to fathom that it’s only been since the fair credit laws of the mid-1970s that women and people of color had an equal shot at borrowing.

A. My mom tells a story of that era, whenever she explains what I do. She was in New York City and didn’t have a credit card and had an issue. They wouldn’t let her use her husband’s card because he wasn’t present. And she tells that story to show how much progress we’ve made.

But I think the last couple of years have taught us we have more progress to go. If we bring in the right people who are focused on the purpose of creating a better tomorrow for the communities that we serve, then we’re able to achieve that purpose.

Fair and equitable access to credit. That is what the goal is. That is what we should all be seeking.

Q. Can you explain how Experian Go works?

A. We are helping people who perhaps are invisible to the credit system, enter the system. It’s a program targeting the “credit invisibles”.

I’ve been pitching this to every graduating high school senior I can find. Because starting early with this education, starting early in the financial journey, sets a foundation for people.

It allows them to have the opportunities to do things like rent an apartment, buy a house, buy a car. All of these things that in our journey through life, we have been able to take advantage of. We need to figure out how the next generation can do that.

Q. The business opportunities are more than just credit histories, yes?

A. It’s the industries with enormous amounts of complexity, whether it be healthcare or mortgage. Innovation and a focus on doing what’s right for consumers throughout the life cycle. We have the opportunity to have an incredible impact.

Look at the work we did with the other bureaus on medical debt. It was putting the consumer at the center and understanding how best to support that consumer appropriately. Because we need to continue to innovate to continue to solve these very complex problems. Technology is helping. And having an open mind to it.

We spend a lot of time and resources making sure we understand what our clients need. But also what consumers need.

Q. So when can I get a mortgage in, say, two minutes?

A. As leaders, you have to find that next big thing. Financial inclusion. Fair access to credit. Solving some of the most painful parts of the financial administrative side of healthcare. To go after those requires change.

Talk about the mortgage industry. A lot of change would be required for me to be able to help give you a mortgage in two minutes. But the technology exists, and the data exists. Now we got to tackle that.

Q. Other opportunities?

A. Finding and selecting auto insurance might be painful. I love the work we’re doing there. It starts with transparency. It starts with data and understanding what is happening and then presenting it back to consumers in a consumable way.

Q. I already get so many personal financial alerts!

A. I think that’s so much better, to be getting too many alerts, than having it be quiet and silent. Then you’re suddenly surprised when you decide you want to buy a car or a mortgage and it’s not a good outcome. I would rather err on where the consumer has access to the data and the information to make good decisions.

Q. I swipe my credit card and I’m instantly being told by the bank that I just charged something. The speed is pretty impressive.

A. Exactly. In a past life, I worked at Visa when we enhanced our technology to allow that sort of real-time alerting. And I have it on every single one of my credit cards. And every once in a while I’ll get an alert and I’ll say that’s not me.

Q. I have to ask: What about the shaky economy?

A. We know that we’re in unsettled economic territory, but we’re proud of the portfolio that we have. And we know that we have weathered the pandemic. So we think we have a very solid foundation on which to drive growth for our clients. I think innovation is probably key.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com

After charities experienced a gangbuster year in 2021 with record donations, philanthropic experts say that charitable giving is likely to plateau or decline this year after the stock market’s prolonged downturn.

Even though the generosity of Americans may be diminished somewhat by the market’s misfortunes this year, an increasingly popular tool for maximizing the tax benefits from charitable deductions is still attracting interest.

The number of donor-advised funds (DAFs), the charitable vehicles sometimes referred to as a “poor man’s foundation,” has nearly tripled to 1.3 million since Congress approved the Tax Cuts and Jobs Act in 2017, which dramatically reduced the need for many taxpayers to itemize their annual returns.

Americans contributed $72.7 billion to DAFs in 2021, up 47% from the previous year, according to the National Philanthropic Trust (NPT), a Jenkintown, Pennsylvania, charity that sponsors the accounts and also tracks the national DAF sector.

DAFs contained $234.1 billion in assets at the end of 2021 and made $45.7 billion in grants to individual charities last year, said Eileen R. Heisman, president of the trust, which analyzes the public tax filings of about 1,000 fund sponsors in its annual DAF Report.

“These were the most dramatic increases we’ve had in years,” said Heisman, who said her initial reaction to the tally was disbelief until the researchers assured her the figures had been double-checked.

Heisman said many donors were induced to donate more of their wealth in 2021 after the prolonged bull market had increased their exposure to capital gains taxes

Is a DAF right for your charitable giving? Here’s what you need to know about the funds.

What are donor-advised funds (DAFs)?

DAFs are a way for taxpayers of any means to group charitable contributions into a single year to reap tax benefits, and then to distribute the funds to their favorite charities over time.

What are the benefits of creating a DAF?

DAFs are a convenient method for philanthropists to donate appreciated stock shares, or other assets. The donor receives a tax deduction for the full value of the asset while avoiding capital gains tax on the increase in the assets’ value.

“People were sitting on highly appreciated assets, and a lot of advisers are telling them (a DAF) is a really easy tool, you can make the gifts relatively easily,” Heisman said. “You can have years of grant-making out of a single gift in one year where you’ve had an abundance of capital gain.”

DAFs became more attractive after the new federal tax law went into effect, dramatically increasing the standard deduction for most taxpayers and putting limits on some itemized deductions, such as state and local taxes and mortgage interest. Charitable contributions are still deductible, and the new tax law created an incentive for taxpayers to consider batching or “bundling” deductible expenses in a single year, so those count toward reducing your taxes.

For some donors who have DAFs, the tax benefits of the funds are of secondary importance. A DAF offers a convenient and easy way to manage a family’s philanthropy, said Janet Wischnia, an owner and managing partner at Thomaston Mills, a family-owned Wyncote, Pennsylvania, firm that manufactures bedding and linens.

Wischnia is no newcomer to DAFs. Her father, Jerome Zaslow, set up a fund at National Philanthropic Trust more than 20 years ago to pay for scholarships in Philadelphia for young entrepreneurs, which she now manages. With NPT’s assistance, the fund now operates mostly on autopilot.

“The people at NPT are really nice and helpful,” said Wischnia, who founded an online bedding line in 2019 called American Blossom Linens. “To do it on your own would be a lot harder. They really supported us.”

What can I donate?

Most DAFs will let you donate cash as well as stock. Some may also accept other types of assets, such as real estate, private equity, insurance, retirement fund disbursements, or even art and cryptocurrencies such as bitcoin.

To whom can I make a grant?

You can make grants to charitable organizations that are tax-exempt under Internal Revenue Code. DAFs cannot make grants to private nonoperating foundations, individuals, political candidates or political parties. Grants cannot be used for any personal benefit, such as tuition, dues, membership fees or any goods purchased at a charitable auction. Grants are not allowed for table sponsorship or tickets at charity events. The DAF sponsor will examine and approve any grants before releasing the funds.

How much do I need to start a donor-advised fund?

Josh Birkholtz, chairman of Giving USA, a Chicago organization that analyzes philanthropic trends for nonprofit clients, chuckles at the “poor man’s foundation” characterization, since DAFS still appeal largely to middle- and upper-income individuals. Indeed, the average DAF last year contained $183,000 in assets, according to the National Philanthropic Trust.

The amount you can invest varies, depending upon the sponsor. Some DAF sponsors have no minimums. National Philanthropic Trust has a $10,000 minimum. Vanguard requires a $25,000 initial investment, and $5,000 minimum on subsequent investments. The Community Foundation of New Jersey requires a $25,000 initial investment, but no minimum on subsequent investments. There are hundreds of DAF sponsors, so examine their terms closely.

For taxpayers who itemize, there are limits to the amounts they can deduct each year for gifts to public charities, including donor-advised funds, according to Schwab Charitable. A taxpayer can claim 30% of adjusted gross income (AGI) for contributions of non-cash assets held more than one year and 60% of adjusted gross income for cash contributions. Contributions in excess of these deduction limits may be carried over up to five subsequent tax years.

How much will a DAF cost me?

Most DAFs charge annual fees based on the value of the fund — Vanguard’s fee is 0.6%, or $300 for a fund containing $50,000. The percentage fees go down for accounts with larger balances. The sponsors also assess fees on the investments, which vary depending upon the complexity of the investment. The fees on money market funds are minuscule, and the fees on index funds are less than those on actively managed funds. Most national DAF sponsors clearly spell out their fee schedules on their websites.

DAF sponsors also set minimums for investments and for grants. Vanguard requires an initial investment of $25,000 and allows charitable donations of no less than $500. T. Rowe Price has a minimum investment of $5,000 and a minimum disbursement of $100. Fidelity and Charles Schwab have no minimum investment and allow donors to make grants of as little as $50.

“Some donor-advised fund organizations have really focused on democratizing it,” said Giving USA’s Birkholtz. “I believe Fidelity was the first to drop the minimums.”

Is it complicated?

DAFs can be as simple or as complex as the donor chooses. Many large national investment management firms — Vanguard, Fidelity, and Schwab — have established 501(c)(3) charities to sponsor DAFs and provide a wide range of investment funds where donors can put the assets to work until they make grants. The growth of online banking has also contributed to the growth of DAFs, allowing donors to conveniently create a fund online and transfer assets into it with a few keystrokes, said Heisman.

Sixty large national DAFs, including the National Philanthropic Trust, accounted for 70% of the $45.7 billion in grants that all DAFs made to individual charities last year. About 600 community foundations, such as the Philadelphia Foundation and the Foundation for Delaware County, also sponsor DAFs and made $9.6 billion in grants. Another 300 single-issue charities, which support specific religious faiths or institutions, also sponsor DAFs that made $4 billion in grants last year.

Why not set up a private foundation for charitable giving?

DAFs still offer many advantages over setting up a private foundation, which requires legal paperwork, and a staff to make grants and to prepare annual tax returns to verify that 5% of the assets are disbursed each year.

DAFs don’t require a minimum payout each year, a sore point for some critics who say the accounts are warehouses for capital. But the National Philanthropic Trust says that donor-advised funds on average disburse far more than 5% of their assets each year. Last year DAFs payed out 27% of their assets in grants, according to the trust.

“If I were a billionaire, I would still choose a DAF over a foundation,” said Birkholtz. “Although Elon Musk didn’t disclose this, he probably did $5 billion-plus in donations last year, and we assume he dropped that in some sort of a donor-advised fund.”

Two COVID-era charitable benefits have expired

The CARES Act permitted taxpayers who claim the standard deduction to get a deduction on their 2020 and 2021 returns for cash contributions of $300 they made to qualifying charitable organizations. It also allowed for a larger deduction (up to 100 percent of AGI, from 60%) for itemizers. Those two features are gone for 2022 and the rules revert back to what they were pre-pandemic.

Very few can claim a tax benefit for giving

To receive a tax benefit for giving in 2022, you must itemize your deductions. That means that you need to tally what you spent on state and local taxes, mortgage interest, out-of-pocket medical expenses, and charitable donations.

If your total itemized deductions are higher than the standard deduction amounts for 2022 ($12,950 for singles, $25,900 for MFJ, and $19,400 for HOH), then you would choose to itemize.

Only about 10% of tax filers itemize, which means that most people who give to charity are doing so for altruistic purposes, not for tax savings. You can try to “bunch” deductions into a single year to push you above the threshold, in which case you should accelerate charitable giving for that particular year.

Itemizers can still give with Uncle Sam’s help

If you have a taxable investment account, you can gift highly appreciated securities to charities: you’ll write off the current market value, not just what you paid, and avoid capital gains taxes.

Retirees can avoid taxable income and feel virtuous

If you’re over 701/2, consider a Qualified Charitable Distribution (QCD), which allows you to gift up to $100,000 directly from your IRA to a public charity (not to a private foundation, a charitable supporting organization or a donor advised fund), without having to include the distribution in your taxable income.

If you use the QCD, you can’t deduct the amount as a charitable contribution, but if you are lucky enough to not need the money for cash flow, a QCD will allow you to avoid paying taxes on the distribution, and it may also satisfy your Required Minimum Distribution.

Consider Donor Advised Funds (DAFs)

These accounts allow you to contribute cash, appreciated assets, or investments and grant to a charity at any time; write off the current market value (not just what you paid) to escape taxes on the accumulated gains; and recommend grants to your favorite charities whenever makes sense for you. DAFs also allow you to give in a year when you have had higher than expected income, or when you are bunching deductions.

Nuts and bolts:

Be cautious and vet your charity

Do not donate over the phone or give anyone your credit card or other personal information until you verify it’s legit with the IRS’s Tax Exempt Organization Search tool.

To see how much of your donation goes to supporting programs (versus overhead), access resources like the Better Business Bureau’s (BBB) Wise Giving Alliance, Charity Watch, GuideStar, Charity Navigator and GiveWell.

Keep good records

For any cash or property valued at $250 or more, you must have a receipt (bank record, payroll deduction or written communication) identifying the organization, the date and amount of the contribution and a description of the property.

For text donations, flag the bill with the name of the receiving organization, the date of the contribution, and the amount given. If you are facing the end of year deadline, use a credit card, so the donation is deductible as of the date the account is charged.

Jill Schlesinger, CFP, is a CBS News business analyst. A former options trader and CIO of an investment advisory firm, she welcomes comments and questions at askjill@jillonmoney.com. Check her website at www.jillonmoney.com.

Who is eligible for loan forgiveness?

Loan forgiveness ONLY APPLIES to federal loans, not private ones — or to Federal Family Education Loans that were issued and managed by private banks but guaranteed by the federal government.

The administration’s plan intended to provide a one-time loan cancellation of $10,000 to any borrower who earns less than $125,000 annually ($250,000 for Married Filing Jointly or Head of Household). Pell Grant recipients (student aid that is geared to lower income borrowers) would be entitled to $20,000. (The rationale for the larger amount is that Pell Grants used to cover nearly 80% of the cost of a four-year public college degree; now, they only cover a third.)

Parent Plus loans held by the Department of Education – and whose borrowers fall under the income limits, would be eligible to receive cancellation of up to $10,000.

While current students are also eligible for loan forgiveness, those who are claimed as a dependent would have their eligibility determined based on their parents’ or guardians’ income.

What should borrowers do right now, as the legal battle continues?

Given that federal loan payments are on pause through the end of the year accruing zero percent interest, it makes sense to get a jump on any outstanding balances above the forgiveness threshold amounts if you can afford to do so. Payments now will shorten the amount of time on your loan, which can be an emotional relief and may also allow you to fund other priorities sooner.

During this waiting period, go to studentaid.gov and make sure that you have auto-debit enrollment — doing so will keep you on track for the resumption of payments and help avoid missed payments and penalties. If your financial situation has changed, check out the DOE Loan Simulator to determine if a different repayment plan better meets your needs or if consolidation might help.

If you previously had not signed up for loan forgiveness, what should you do?

The Department of Education says that because of the current court orders, they are not accepting new applications. If you have already applied for forgiveness, they will hold your application.

The Biden plan also contemplated changes to Income-Driven Repayment (IDR) plans — are those at risk of being rolled back?

IDR plans are for borrowers who can’t afford the scheduled loan repayments. The repayment is based on what you earn, which is currently 10% of your discretionary income. The Biden plan contemplated that payments would be capped at 5% of income; would raise the amount of income that is protected from repayment; and would forgive loan balances after 10 years of payments, instead of 20, for borrowers with original loan balances of $12,000 or less. All of these changes are on hold until there is resolution of the legal battle.

Are there any updates on the Public Service Loan Forgiveness (PSLF) program?

The Administration had previously eased some of the rules for PSLF, which means more people who work FULL TIME for government, the military or non-profit organizations may qualify for loan forgiveness or cancellation.

What will loan forgiveness cost?

Debt cancellation will cost around $500 billion, according to analysis by researchers at the Penn Wharton Budget Model. However, adding forbearance and changes to IDR, costs could swell to $1 trillion.

Jill Schlesinger, CFP, is a CBS News business analyst. A former options trader and CIO of an investment advisory firm, she welcomes comments and questions at askjill@jillonmoney.com. Check her website at www.jillonmoney.com.