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Author: Vawn Himmelsbach

  • Trump wants to ‘abolish’ the IRS and replace federal income tax revenue with tariffs on imports — how would such a move affect middle-class Americans?

    Trump wants to ‘abolish’ the IRS and replace federal income tax revenue with tariffs on imports — how would such a move affect middle-class Americans?

    U.S. President Donald Trump plans to replace income taxes with tariffs, but what does that mean for the average middle-class American?

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    “Donald Trump announced the External Revenue Service, and his goal is very simple: to abolish the Internal Revenue Service and let all the outsiders pay,” U.S. Commerce Secretary Howard Lutnick told Fox News on Feb. 19. The idea is that once the budget is balanced, taxes will be waived for Americans earning less than $150,000 a year.

    However, the flaw in this plan is that tariffs are not paid by “outsiders.” Rather, tariffs are a tax placed on imported goods and services.

    “When the U.S. imposes tariffs on imports, businesses in the United States directly pay import taxes to the U.S. government on their purchases from abroad,” according to the Tax Foundation. During Trump’s first term, “the economic evidence shows American firms and consumers were hardest hit by the Trump tariffs.”

    At the same time, it would be hard to replace the revenue collected from income taxes with revenue from the planned tariffs. According to a study by the Peterson Institute for International Economics (PIIE), a non-partisan research group, the U.S. imported $3.1 trillion in goods in 2023 while raising about $2 trillion through individual and corporate income taxes.

    This means it would be nearly impossible to replace income taxes with tariffs, since the tariff rate would have to be “implausibly high,” according to PIIE. The institute determined that even at a “revenue-maximizing tariff rate,” the U.S. could raise only a fraction of what it raises with income taxes.

    Additionally, Trump’s policy could become a victim of its own success. If the result of the policy is that most manufacturing moves to the U.S., there will be fewer imports to tariff, making the replacement of income taxes even more difficult.

    The Tax Policy Center speculated there could also be a new consumption tax to help with the revenue shortfall.

    "Congress isn’t going to vote any time soon to explicitly replace the income tax with a consumption levy. But aggressive efforts to dismantle the IRS combined with a hollowing out of the income tax base could render the existing revenue system unsustainable. And drive lawmakers to replace it with something else," wrote Howard Gleckman a senior fellow at the Tax Policy Center.

    Layoffs and resignations at the agency have left commentators worry about the agency. "The future of the IRS is in doubt in ways Americans have never seen before," wrote MSNBC political contributor Steve Benen recently.

    Here are 3 potential impacts on America’s middle class if tariffs replaced income taxes:

    1. Prices are likely to rise

    It’s difficult to quantify the effects of Trump’s tariff proposals since they’re continually changing.

    But research has shown that during the last Trump trade war in 2018, tariffs resulted in price increases of 10% to 30% for goods subject to tariffs and that much of the tariffs were passed on to U.S. importers and consumers.

    The Federal Reserve of Boston looked at an additional 25% tariff on goods from Canada and Mexico with an additional 10% tariff on goods from China, and estimated they would add 0.8 percentage points to core inflation (excluding food and energy).

    The policy proposed during Trump’s campaign (an additional 60% tariff on imports from China and an additional 10% tariff on imports from the rest of the world) would add 2.2 percentage points to core inflation.

    Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it

    2. After-tax income could decline

    These price increases will have a greater impact on middle- and lower-income Americans since these demographics tend to have less disposable income.

    To test these effects, PIIE studied what would happen if tariffs were maximized in an attempt to replace income taxes. The result? The tax cut for the middle quintile of income earners would not compensate for the tariff increase and they’d see a net after-tax income loss of about 5%.

    This loss in income would be 8.5% for the lowest quintile, while the top quintile would come out 2% ahead. The top 1% would see an increase of 11.6%.

    Those losing net income to the tariff-income tax trade-off are unlikely to find much help from improved economic and employment conditions.

    3. Tariffs could hurt the economy and cost jobs

    Oxford Economics estimates that Trump’s 2018 tariffs on Chinese goods and the resulting trade war cost 0.5% of U.S. GDP. “At its peak, the trade war cost the U.S. economy an estimated 245,000 jobs and on a cumulative basis, real household income was $88 billion lower over 2018–2019 (in 2020 prices), or around $675 per household,” it said.

    An argument for tariffs is that domestic companies would become more productive and innovative, but one University of California, Davis study of a past era of high tariffs found that they had the opposite effect.

    “Less competitive industries are less innovative, and less innovative industries are less productive,” said author Christopher Meissner. “Tariffs probably weakened the incentives to innovate and come up with streamlined processes that keep companies on their toes and productivity high.”

    All told, these forces have the potential to be a drag on the economy and employment that may outweigh any jobs created by the tariffs. A study of 151 countries from 1963 to 2014 found that, in the medium term, tariffs have only small effects on the trade balance but lead to lower domestic output and productivity, higher unemployment and greater inequality.

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    This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

  • My partner of 2 years is drowning in $80K credit card debt and kept it a secret from me — now he wants to move in with his parents while he pays it off. We’re in our 30s. What should I do?

    My partner of 2 years is drowning in $80K credit card debt and kept it a secret from me — now he wants to move in with his parents while he pays it off. We’re in our 30s. What should I do?

    It’s understandable if you’re not keen on moving in with your boyfriend’s family or visiting him at his parents’ house. Your life goals may also be put on hold while he sorts out his finances.

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    On a more emotional level, you have every right to be upset that he neglected to tell you about his debt in the first place. This is a huge betrayal to uncover just as you start planning a life together. After all, what else could he be hiding from you?

    Here are some important factors for you to consider and steps he can take to tackle his debt.

    Should you build a future with him?

    While your partner needs to come up with a debt repayment plan (more on that later), you also need to ask yourself some important questions. For example, is his debt a one-time crisis or is it part of a pattern? And are you willing to put your dreams on hold while he’s living with his parents?

    While it’s a good sign that he’s taking responsibility for paying back his debt, how can you ensure this won’t happen again, especially if you get married and have kids?

    If you stay with him, and if you’ll do eventually get married, you may want to take steps to protect your finances.

    That could mean a co-habitation or prenuptial agreement or simply maintaining financial independence through separate bank accounts and retirement savings plans. You may also want to avoid co-signing loans, sharing accounts or merging accounts.

    You would also have to accept that you may have to put your dreams on hold while he pays off his debt, whether that’s buying a house and having a kids or preparing for an early retirement — and you’ll need to feel confident that his debt is the result of a one-time crisis and not an ongoing pattern of behavior.

    Research has shown that financial stress is linked to less relationship satisfaction for both partners. If you’ll are committed to making it work, then it may be worthwhile for the two of you to seek professional advice from a financial advisor or credit counselor and perhaps couples therapy.

    Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it

    How to deal with credit card debt

    Credit card debt can quickly spiral out of control, especially in today’s environment. The average APR (for a new credit card) sat at a whopping 24.28% in May, according to Lendingtree.

    Let’s say your partner has a 20% APR on his credit card. That means he’d be paying more than $1,300 a month just in interest — so little to no progress could be made on the principal unless larger payments are made. Making a minimum payment (which often falls between 1% to 5% of the outstanding balance) wouldn’t even make a dent on the interest.

    So, it makes sense that he would consider moving back in with his parents (under the assumption that they’d charge him minimal or no rent).

    He could take that rent money and put it toward his credit card debt instead — say, through the debt avalanche method, which involves paying down your high-interest debt first, then moving on to debts with lower rates.

    If he has multiple unsecured debts, he could look into debt consolidation through a balance transfer credit card or a debt consolidation loan. While this won’t lower the amount he owes, it could make it easier to pay back by combining multiple high-interest debts into a single monthly payment and it’s possible he will get a lower interest rate.

    With balance transfer credit cards, keep in mind that the low-interest rate is typically only offered for a limited introductory period and there may also be extra fees involved. This should only be an option if he is confident he can repay the debt within the introductory period.

    He may also want to consider getting a side hustle or a second job, even for a short while, to pay back his debt faster (and get out of his parents’ basement faster). Or, he could ask to take on extra hours at work or even negotiate for a higher salary.

    All of this will be a moot point, however, if he’s not able to get his spending under control. That means living with his means and sticking to a budget. He may want to seek advice from a nonprofit credit counseling service if he’s struggling to do this.

    If, however, his credit card debt is more than 43% of his gross annual income, he may want to explore debt relief options, such as a debt management plan, debt settlement or even bankruptcy.

    For someone with multiple high-interest unsecured debts, a debt management plan offered through a credit counseling agency could help by consolidating those debts into one and reducing the interest rate, while providing a structured timeframe for paying back the debt.

    Debt settlement involves negotiating with creditors to reduce the amount you owe. Keep in mind this could damage your credit score — plus, you may have to work with an intermediary, which will often charge a hefty fee (and you may owe income tax on any debt that’s forgiven). “You also have to watch out for dishonest debt settlement companies that make promises they can’t keep, charge you a lot of money, and then do little or nothing to help you,” warns the FTC.

    Bankruptcy, which allows you to reduce or repay your debt, is often considered a last resort. Chapter 7 bankruptcy allows you to clear some or all debt, but you’ll have to hand over your assets. Chapter 13 bankruptcy allows you to keep those assets but you’ll have to pay back part of your debt within three to five years. Declaring bankruptcy will stay on your credit report for 10 years. “The negative credit score impact of bankruptcy eases as time passes, but some lenders refuse to extend loans or credit to anyone with a bankruptcy entry on their credit report,” says Experian.

    What to read next

    This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

  • Montana farmers — left in limbo as Trump’s ‘random’ tariffs threaten their livelihood — fight back, throwing support behind bill to ‘bring stability and accountability’ to US trade policy

    Montana farmers — left in limbo as Trump’s ‘random’ tariffs threaten their livelihood — fight back, throwing support behind bill to ‘bring stability and accountability’ to US trade policy

    A 25% tariff on Canadian imports has left Montana farmers in limbo and worried about their livelihoods, given Canada is Montana’s largest trading partner.

    “Many of our farmers, their closest supplier or their closest buyer is from Canada,” Walter Schweitzer, president of Montana Farmers Union (MFU), told NBC Montana.

    “And they’ve been receiving letters telling them they don’t know if they’re going to be able to honor their contracts this year because of the tariffs.”

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    Now Schweitzer’s union is taking legal action and supporting a proposed bill — The Trade Review Act of 2025 — that it hopes will offer some tariff relief.

    ‘Decades to rebuild’

    According to the U.S.Census Bureau, Montana exports more goods to Canada ($869 million annually) than its next seven largest foreign markets.

    Of those, 39% are agricultural such as live cattle, dried legumes and barley.

    Meanwhile, Montana imports $6.8 billion in goods from Canada each year. In 2023, it imported $411 million in agricultural products, including canola oil, dried legumes, mustard seeds and wheat.

    “Farmers and ranchers have invested decades in developing reliable markets for our products,” Schweitzer said in a statement. “Overnight, these random tariffs have destroyed markets that will take decades to rebuild.”

    Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it

    While his union supports “strategic” tariffs, Schweitzer said President Donald Trump’s tariffs don’t fall in this category. He said billions of dollars are at stake for Montana’s farmers and ranchers; crop prices are already falling.

    The MFU is joining members of the Blackfeet Tribe in asking a U.S. District Court judge for a court injunction to stop the implementation of tariffs on Canada.

    It is also supporting a bipartisan bill currently before the House Ways and Means Committee: The Trade Review Act of 2025,

    The Northern Ag Network says the bill aims to “bring stability and accountability to U.S. trade policy by reestablishing limits on the president’s ability to unilaterally impose tariffs without the approval of Congress.”

    How the Trade Review Act could help

    If passed, the Act would require President Donald Trump to notify Congress within 48 hours of imposing or increasing a duty on imported goods. It would also require an analysis of the economic impact of any such action.

    Schweitzer said the authority to impose tariffs should reside with Congress “because it provides a forum for public debate and input and ensures the benefit outweighs the harm.”

    Any new tariffs would expire after 60 days (unless the tariffs passed a joint resolution of approval) and Congress could terminate tariffs at any time (through a joint resolution of disapproval).

    The Act could provide a way to review — and potentially overturn — tariffs that negatively impact agricultural exports. It could also create a possible pathway for legislative pushback, resulting in smarter, more strategic tariffs (or none at all).

    By requiring congressional approval, it could reduce the volatility that farmers are currently experiencing with on-again, off-again tariffs. Stability is key for farmers, since they make long-term production decisions based on trade outlooks.

    And, it could help to preserve export markets and possibly prevent retaliatory tariffs from trading partners. While Canada is Montana’s largest trading partner, Montana also trades with China, Mexico and several European nations, all subject to tariffs.

    The executive branch has “overstepped its constitutional and statutory authority on these tariffs,” MFU’s Schweitzer said in the statement. “Montana farmers and ranchers can’t afford any more uncertainty or any more financial stressors — especially not random tariffs.”

    What to read next

    This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

  • Texas police recover 4 stolen GMC trucks from Houston worth $220K linked to VIN cloning ring — what crimes like these can mean for your wallet down the road

    Texas police recover 4 stolen GMC trucks from Houston worth $220K linked to VIN cloning ring — what crimes like these can mean for your wallet down the road

    Police in Hays County, Texas recently recovered four stolen GMC Denali trucks traced back to Houston valued at more than $220,000. On each of the trucks, the vehicle identification number (VIN) had been “cloned” to dupe unsuspecting buyers.

    The vehicles were located after an investigation by the Hays County Sheriff’s Auto Theft Unit and other law enforcement agencies — thanks to tips from the Hays County Tax Assessor’s office about suspicious vehicle titles, according to Click2Houston.

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    “The GMC Denalis were sold by suspects on Facebook Marketplace for a price significantly below market value,” the Hays County Sheriff’s Office wrote on Facebook. “All victims were provided fictitious titles for the cloned vehicles.”

    VIN cloning occurs when auto thieves replace the VIN of a stolen car with the VIN of a legally registered car, often of the same make and model, according to Chron.

    Since the VIN belongs to a vehicle that hasn’t been reported as stolen, the vehicle can be passed off as “clean” and sold to an unsuspecting buyer.

    Here’s how to avoid becoming the next victim.

    Buying used? Look for red flags

    In 2024, more than 850,000 vehicles were stolen in the U.S., costing car owners around $8 billion, according to the National Highway Traffic Safety Administration (NHTSA). Vehicle theft can lead to significant financial losses, including the cost of replacing a car and a higher insurance rate over the long term. But it’s not just car owners who pay the price.

    Buyers of used vehicles are also at risk. For example, if authorities discover you’ve bought a cloned car, your car can be seized and you won’t be reimbursed, according to the National Insurance Crime Bureau.

    So it pays to exercise extra caution when buying a used vehicle from a private seller.

    Red flags can include vehicles being sold on social media, vehicles with out-of-state titles and prices significantly below market value.

    For example, the GMC Denali trucks were sold significantly below market value on Facebook Marketplace.

    In some states, you can have a VIN verification inspection performed by the DMV before you buy a car. If the seller refuses, that’s a red flag. Always get a vehicle history report and perform a title search through the National Motor Vehicle Title Information System — and be sure to get the seller’s I.D.

    To help prevent your car from being stolen, the NHTSA recommends that owners “use common sense.”

    For example, don’t leave your vehicle running unattended, park in well-lit areas if possible and lock all windows and doors when you park. You may want to consider an anti-theft system such as an immobilizer or vehicle recovery system, too.

    If your car is stolen, contact the police immediately. Once you have the police report, you’ll need to contact your insurance company within 24 hours of the time it was stolen. If you find your vehicle before the police do, contact the police and your insurance company immediately.

    Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it

    Make sure you have the right insurance

    Comprehensive coverage is the only type of vehicle coverage that will allow you to make claims for theft. If your car isn’t recovered or is totaled after it’s stolen, comprehensive coverage may pay out the actual cash value of the car.

    While vehicle insurance doesn’t cover personal items that were in the car when it was stolen, your homeowner’s policy likely will.

    The actual cash value of the car is what your car was worth when it was stolen after accounting for depreciation and the condition of your car. It will likely be below the replacement value of the car, and it may even be lower than your outstanding loan or lease balance.

    If your car is relatively new, you may want to consider new car replacement coverage, which will pay out enough for you to replace your car with the same make and model. You might also want to consider getting gap insurance, which will pay off what you still owe on your loan or lease if the initial payout isn’t enough to cover this.

    Your insurance premiums are likely to go up after a theft. But whether they do, and by how much, depends on your specific policy.

    And, even if your car is recovered, its value may drop. This decision will be up to the insurance company, which will determine the amount of depreciation to assign to the car and whether to place a salvage title on it.

    A salvage title is assigned when the insurance company deems the cost of repairing the car to be greater than the value of the car. This can happen if the car has been in an accident, vandalized or stripped of parts. You can choose to buy back your car with a salvage title, but it will be difficult to sell or finance — and will likely lose 20% to 40% of its value, according to Kelley Blue Book.

    Car theft isn’t just inconvenient, it can be costly. But taking precautions as a buyer and making sure you have the right insurance can help.

    What to read next

    This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

  • Hundreds of Detroit-area auto workers temporarily laid off by GM and Stellantis amid economic uncertainty — how to protect your finances when you’re furloughed

    Hundreds of Detroit-area auto workers temporarily laid off by GM and Stellantis amid economic uncertainty — how to protect your finances when you’re furloughed

    Across Metro Detroit, hundreds of General Motors and Stellantis auto workers have been temporarily laid off this year.

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    The layoff announcements came soon after the Trump administration slapped 25% tariffs on all automobile imports with a partial exemption for vehicles manufactured under the United States-Mexico-Canada Agreement.

    President Trump has said this rate could go up for Canada. The 25% tariffs also apply to auto parts since May 3.

    Some of the layoffs so far this year have been unrelated to tariffs, but tariffs could lead to long-term issues for the industry, resulting in increased costs for imported parts, higher prices for consumers and the potential for reduced demand, impacting overall industry stability.

    While Trump says auto tariffs will shift production of cars and car parts back to the U.S., experts warn this could take years (if it’s even possible at all).

    “The automakers are in a serious predicament,” Patrick Anderson, president of Michigan-based think tank Anderson Economic Group, CNN. “They’re going to have to make tough decisions about what production to continue, what not to make … We expect implementation of these tariffs to affect jobs across the United States.”

    The scope of the layoffs

    Last month, GM furloughed about 200 workers at its Factory ZERO plant, which builds electric vehicles, saying in a statement that the factory “will adjust production to align with market dynamics.” The company claimed the layoffs are not related to tariffs.

    Factory ZERO employs more than 4,500 employees; those who’ve been furloughed don’t yet have a return-to-work date.

    in April, Stellantis also temporarily laid off 900 American workers — via a company-wide email — for two weeks. This affected employees at the Warren Stamping and Sterling Stamping plants in Michigan, among other plants in the country, according to CNN.

    In this case, the automaker recognized the impact of tariffs on the industry. “With the new automotive sector tariffs now in effect, it will take our collective resilience and discipline to push through this challenging time,” stated Antonio Filosa in the corporate email.

    According to The Detroit News, the company said more than half of the employees from Sterling Stamping and Indiana plants who were put on temporary layoff when production was paused the week of April 7 would return to work on April 22.

    Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it

    Production at the Warren Truck Assembly Plant is down due to “an internal shortage of engines.” This is reportedly affecting 1,000 workers.

    Stellantis’s Mack and Jefferson North facilities in east Detroit have also faced downtimes recently due to the transition to a refreshed 2026 Grand Cherokee.

    Tips for workers facing temporary layoffs

    If you’re a worker experiencing a temporary layoff — and not sure if and when you’ll be back to work — there are steps you can take to protect your financial future.

    If you’re part of a union, contact your union representative so you understand your rights and how temporary layoffs work, like if you still get benefits. You may be eligible for unemployment insurance benefits. You may also be eligible for a furlough grant, which can help cover your bills.

    Each state has its own unemployment insurance program; to qualify, you’ll need to meet certain requirements (such as time worked consistently). Typically you’ll be compensated for up to 26 weeks, depending on the state.

    To budget during an income gap, you may want to prioritize essentials, delay large purchases and possibly even negotiate some of your bills. It helps to have an emergency fund, which should ideally cover three to six months of expenses. If you don’t have one, make it a priority to build one once you’re back to work. You may also be able to borrow from your 401(k).

    Consider taking on a side gig in the meantime to bring in some extra cash and possibly putting some aside in an emergency fund. You could also use the time to take online courses, pursue certifications and polish off your resume.

    In the long-term, it may be worth looking at reskilling opportunities to better prepare for an uncertain future.

    What to read next

    This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

  • Finance professor bought Nvidia at US$0.48/share — but sold early and missed a life-changing gain of more than 25,000%. Here’s how investors can avoid his mistake 2025

    Finance professor bought Nvidia at US$0.48/share — but sold early and missed a life-changing gain of more than 25,000%. Here’s how investors can avoid his mistake 2025

    Long-term investing can test even the most disciplined investors. With markets swinging on everything from AI breakthroughs to political headwinds, the temptation to act emotionally — especially during big wins or downturns — is real.

    Amos Nadler, a behavioural finance expert and former professor at Western University’s Ivey Business School, knows this first-hand. Years ago, he bought shares of Nvidia (NASDAQ:NVDA) for just US$0.48 each. But before the chipmaker exploded into a US$3 trillion AI juggernaut, he sold most of his holdings — missing out on one of the biggest stock runs in tech history. As of March 2025, Nvidia trades around US$108 a share, after its value surged on AI chip demand and record-breaking earnings.

    Nadler’s story is more than a missed opportunity — it’s a case study in cognitive bias, and it holds critical lessons for investors trying to navigate 2025’s volatile but opportunity-rich market.

    The biggest reason for investor mistakes

    When Nadler was starting his teaching career, he wanted to gain some hands-on investment experience to share with his students. As a result, one of his earliest investments was stock in technology company Nvidia (NASDAQ:NVDA)— about US$800 to US$1,000 worth of stock. He paid approximately US$0.48 per share.

    After holding them for a period of time, Nadler noticed that the shares had earned a decent profit so he decided to sell a large chunk of his holdings. This was before 2014 and before Nvidia (NASDAQ:NVDA) would become a household name.

    Nadler’s goal was to talk about his experience. Turns out the sale gave Nadler lots to talk about with his students — since it was a big mistake.

    “I needed some war stories. I needed to talk about gains and losses,” he recently told CNBC Make it. “I need to put my own money to play and experience these things, and take it out of the lab, take it out of the textbooks.” Nadler’s lesson should be used by any investor tempted by bias or emotion.

    According to his trading brokerage, Nadler paid about US$0.48 per share, factoring in the stock splits during the company’s history. As of March 31, 2025, Nvidia (NASDAQ:NVDA) stock closed to US$108 per share, reflecting recent market volatility influenced by factors such as underwhelming initial public offering (IPO) of CoreWeave and concerns over potential tariff implementations. The firm’s value increased by more than US$2 trillion just last year.

    If Nadler had held onto the stock, his gain would have been over 28,000%. The value of his holdings would have been “enough to buy a nice house somewhere,” according to Nadler.

    Here’s the thing: Nadler sold the stock because he succumbed to a cognitive bias known as loss aversion. A cognitive bias is a consistent, repeated error in the way we process information and perceive reality. Loss aversion is a common cognitive bias that leads us to perceive losses as more significant than gains.

    In investing, loss aversion can cause us to fear losing the gains of a winning bet in our portfolio. It’s what happened to Nadler when he chose to sell his Nvidia (NASDAQ:NVDA) stock. As he tells it, “What was going through my head was, ‘Hey, I’m new with this. I just made a significant profit in a very short amount of time. I want to lock it in because I’m feeling afraid it may drop again.’”

    How loss aversion is driving your investment decisions

    You can judge your own loss aversion by considering whether you’d rather have $100 or flip a coin to either gain $200 for heads or $0 for tails. Most people would prefer the certain $100 and value the potential “loss” of this as greater than the potential but uncertain gain of $200. Still not sure, consider the same coin toss scenario but with a payout of $500 or $1,000. The lower the sum you’re willing to accept, rather than risk for the 50/50 chance of getting more, illustrates how risk averse you are (both in coin tosses and investing).

    So, how does loss aversion impact your investment decisions?

    If you choose to cash-in on your gains, end up being too conservative in your portfolio construction, try to time your entry into the market or instinctively move to cash to avoid volatile markets than you’re operting from a loss aversion bias — and this can all hurt your overall portfolio performance.

    Avoiding this cognitive bias means carefully evaluating any stock sale, especially if you plan to move to cash, and trying your best to remove emotion (such as fear) from the decision. For instance, if you’re planning to sell a stock because it’s had a strong run, but fundamentals suggest it’s still a solid investment, you may want to step back and evaluate whether you’re making a rational decision or your actions are being driven by fear.

    Engaging with a financial adviser could potentially help you manage that fear by providing an arms-length assessment of your decisions. An adviser could also help you set realistic investment goals so you’re not relying on “bets,” while also helping you diversify your holdings to spread your risk and make individual risks within the portfolio feel less intimidating.

    Increasingly, there are also technological tools available to help you remove emotion from investment decision-making. For instance, Nadler founded Prof of Wall Street, which provides software products that help investors use behavioural science to manage biases and improve investment decision-making.

    Fear can be a powerful force. Identifying it and enlisting the help of a financial adviser or technological tool could help to take the cognitive bias out of investment decision-making and, hopefully, result in better returns.

    Sources

    1. CNBC Make It: I sold Nvidia — then it went up over 28,000%, says behavioral finance prof: I could’ve bought ‘a nice house somewhere’, by Ryan Ermey (Dec 12, 2024)

    This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

  • ‘Worries about the economy and labor market have started to spread’: Americans are anxious about the impact of Trump’s policies — 3 things to do now to protect your finances

    ‘Worries about the economy and labor market have started to spread’: Americans are anxious about the impact of Trump’s policies — 3 things to do now to protect your finances

    Economists, traders and industry leaders are worried about the impact of President Donald Trump’s policies. So it’s no wonder the average American is worried as well.

    A stock market correction — like the one happening now — might be good for billionaires who see it as a buying opportunity. But for the average American? Not so great, as they watch their 401(k)s decline in value.

    Tariffs, trade wars, and cuts to government programs have many Americans worried about what Trump’s policies will do to their finances — and their retirement savings. Only 4 in 10 voters view his handling of trade and the economy favorably, according to an AP-NORC poll.

    Consumers’ expectations for the future fell for a fifth consecutive month this April, reaching a 13-year low of 54.4, according to the most recent Conference Board Consumer Confidence Survey. That’s the lowest it’s been since October 2011 and “well below the threshold of 80 that usually signals a recession ahead.”

    These findings suggest that “worries about the economy and labor market have started to spread into consumers’ assessments of their personal situations,” said Stephanie Guichard, senior economist of global indicators at The Conference Board.

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    Economic fears may be justified

    These fears may be justified, given some of Trump’s proposals. One such proposal, reiterated by U.S. Commerce Secretary Howard Lutnick to Fox News, is to replace income taxes with tariffs.

    Although it’s difficult to accurately quantify the effects of Trump’s tariffs at this point, research has shown that his 2018 tariffs resulted in price increases for goods subject to the tariffs, hurt U.S. GDP, cost jobs and reduced real income by about $674 per household.

    Analysis by the Peterson Institute for International Economics (PIIE), an independent and non-partisan research group, also shows that price increases from tariffs will hurt middle- and lower income Americans the most. And, if used to replace income taxes, the middle quintile of income earners — defined as those earning on average $74,730 — would see a reduction in net after-tax income while top earners would see an increase.

    And In their most recent Summary of Economic Projections (SEP), Federal Open Market Committee (FOMC) participants downgraded their expectations for GDP and increased their forecast for inflation. There’s “already at least a whiff of stagflation right now” in the U.S., Richard Clarida, global economic advisor at Pacific Investment Management (Pimco), told Bloomberg Surveillance.

    Along with higher prices, consumers are also concerned about cuts to social services, including their Social Security and Medicaid benefits.

    Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it

    While Trump has said several times that he’s not going to touch these, dramatic cuts to the Social Security Administration (SSA) could lead to “system collapse and interruption of benefits,” Martin O’Malley, former commissioner of the SSA, told CNBC — a move that some believe will be used to justify privatization.

    In 2025, almost 69 million Americans per month will receive a Social Security benefit, according to the SSA. But DOGE is cutting 12% of the Social Security Administration (SSA) workforce, consolidating regional offices (from 10 to four) and closing 45 field offices, which is expected to impact service levels.

    3 steps to safeguard your finances

    If you’re looking for ways to safeguard your financial future, here are three ways to shore up your finances right now:

    Protect your income: Now is a good time to make sure you can weather shocks, including reduced income or unemployment. If you don’t already have one, build an emergency fund. Given the prospects for the economy, set aside enough to cover at least six months of expenses — and, if you think it could be hard to find a new job in your field, set aside a year’s worth. As you’re saving, it’s also a good time to pay down any debt you may have (like that credit card bill) in case you’re not able to pay it back right away should you lose your main source of income. You might also want to review your insurance coverage with a qualified broker to mitigate risks should you need to tap on coverage in the event of an emergency.

    Save, save, save: With rising prices, it could be harder to save for retirement. But, to the extent possible, save as much now as you can. Revisit your financial plan with an advisor to see what you need to save — particularly if you’re highly dependent on your Social Security benefit. If income taxes were to disappear, tax-deferred accounts would likely disappear with them — but in the meantime, try to max out the employer contribution on your 401(k) and use top-ups if you’re over 50 and qualify. Create a budget that helps you find some money to put away each month and hold off on large purchases (you’ll thank yourself later).

    Make sure your money is working as hard as it can for you: Speak to your financial advisor about stagflation-proofing your portfolio and reducing the impacts of tariffs. This likely means greater diversification into different assets — and potentially alternative assets — and into wider geographies to reduce exposure to the U.S. and countries most affected by U.S. tariffs.

    Big changes may be coming to the U.S. economy, and while we’ve yet to see if the promised benefits will take root in the long run, we do know the short-term pain may be an indication of things to come.

    What to read next

    This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

  • My 83-year-old mother pays her rent on time, but she’s a hoarder — her place is crammed with old newspapers and other garbage. If the condo board finds out, can her housing be taken away?

    My 83-year-old mother pays her rent on time, but she’s a hoarder — her place is crammed with old newspapers and other garbage. If the condo board finds out, can her housing be taken away?

    Laura’s 83-year-old mother is still sharp, stays active and pays her bills on time. But Laura no longer visits because her mother doesn’t want to host anyone in her “messy” condo.

    The problem is, it’s more than a mess; her mom is a hoarder.

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    Laura doesn’t know how to address the situation with her mother, but she’s worried. Cardboard boxes, old newspapers and piles of papers are a fire hazard, and rotting food and garbage could lead to mold or vermin. Those pose risks not only to her mother’s health, but to other tenants in the building.

    But she’s also worried that if the condo board finds out — say, the neighbors start to notice a bad smell coming out of her mother’s unit — that social services could end up getting involved. Maybe she’d even get evicted.

    Should Laura step in before someone else does?

    The many risks of hoarding

    Laura’s mother is far from alone. About 2% of Americans (and 6% of those over 70 years old) are compulsive hoarders.

    Hoarding isn’t just living with clutter and mess; it’s a mental illness that can interfere with physical, emotional and even financial wellbeing.

    Hoarding is defined as a “persistent difficulty discarding or parting with possessions, regardless of their actual value,” according to the Mental Health Academy. “The difficulty is due to a perceived need to save the items and to the distress associated with discarding them.”

    Aside from making it difficult to perform everyday tasks, hoarding has potential health and safety risks (not to mention the risks of social isolation).

    For example, it can be a fire hazard and lead to infestations, such as cockroaches, bedbugs or mice. Once pests take up residence, it can lead to health issues such as asthma and other respiratory conditions.

    But it can also lead to financial risks. Some hoarders don’t pay their bills because they can’t find the paperwork. But they also risk eviction. While technically you can’t be kicked out of your home for being messy, a condo board could make a case for eviction if hoarding endangers other tenants or the property, or if it violates safety, fire or building codes.

    “More tragically, those who hoard are more often subject to forced evictions, and if health authorities or environmental health officers become involved, the cost to the hoarding tenant may be considerable if the home is subject to a forced clearing-out,” according to the []Mental Health Academy](https://www.mentalhealthacademy.com.au/blog/hoarding-disorder-the-items-and-the-impact).

    To top it off, if they’re evicted they may have a hard time finding another home, since they’d be unlikely to get a positive reference from their current landlord.

    Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it

    How to manage a hoarding situation

    Laura could talk to her mother and offer to help her “declutter.” If her mom isn’t amenable to the idea, she may have to address the situation with the condo board — for the sake of her mother’s health and safety. If that’s the case, she may want to come up with a plan to address the issue in a timely fashion so the condo board doesn’t escalate it further.

    The condo board will likely have a process in place for dealing with this type of scenario; usually, the tenant is given a certain period of time to clean their unit. If the tenant ignores this request, however, the condo board could file a petition to have the unit cleaned, which could be particularly distressing for a hoarder.

    Laura may want to consult a therapist or even a professional organizer specializing in hoarding, who could help to create a more gradual — and compassionate — plan for decluttering.

    Rather than focusing on the possibility of eviction, it may be more useful to focus on the hoarding behavior and what’s causing it. By offering support and resources — and by bringing in professional help — it could lead to a more sustainable solution.

    After all, forcing someone to declutter without addressing the root cause means they’re likely to repeat the hoarding behavior.

    What to read next

    This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

  • OIder Americans got fleeced online last year, FBI says, losing an average $83,000 to scams. Here’s how to learn from their mistakes

    OIder Americans got fleeced online last year, FBI says, losing an average $83,000 to scams. Here’s how to learn from their mistakes

    Being robbed doesn’t always happen at gunpoint. Cybercriminals can sneak into your home through your computer and your phone — and may make you an unwitting accomplice to your own robbery. It’s a problem for everyone, but if you’re over 60, you’re particularly vulnerable.

    Last year, losses to cybercrime increased 33% from 2023 to a record $16.6 billion, according to the Federal Bureau of Investigation (FBI) Internet Crime Report 2024.

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    Last year, the FBI’s Internet Crime Complaint Center (IC3) received 859,532 total complaints, of which about 256,000 resulted in losses averaging about $19,000.

    But these numbers understate the true scope of the problem since they’re based only on crimes reported to the IC3.

    Why older Americans are being targeted

    Older Americans tend to become less financially literate and digitally savvy as they age, making them a prime target for cybercriminals. If they’ve been widowed, they may be lonely and more prone to romance or confidence scams.

    This older demographic reported about 147,000 cybercrimes in 2024, which is a 46% increase from 2023. Not only do they represent a significant portion of those lodging complaints, but they’re also losing more money than average.

    As a group, their total losses were $4.885 billion in 2024, which is about 40% of the total losses for all Americans, averaging about $83,000 per person. And 7,500 complainants lost more than $100,000.

    Americans 60+ most frequently reported being the victims of phishing or spoofing, tech support scams, extortion or sextortion, personal data breaches and investment scams.

    Investment scams were responsible for the largest financial losses for those 60+ in 2024, followed by tech support and confidence and romance scams. Across all attack types, the losses to scams involving cryptocurrency were substantial.

    Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it

    Common types of cyberattacks

    Phishing or spoofing occurs when a cybercriminal pretends to be a reputable source, such as your bank, to obtain sensitive information such as passwords or financial information. It’s often done through email but can also be done through voice, text, QR codes and fake websites. Phishing has become increasingly sophisticated, thanks to generative AI.

    Tech support scams come in many forms, such as a pop-up on your computer screen or a phone call that’s supposedly from a legitimate tech company. Typically, it will alert you to a ‘problem’ on your computer and offer to fix it for you — for a charge, of course.

    Individuals targeted for cyber extortion are commonly contacted through email or text.

    Cybercriminals threaten to release sensitive information about you on social media or to your contacts unless you pay a ransom by transferring money or cryptocurrency to them. Often they’ll be bluffing, but in some cases they may have illegally acquired this information.

    Personal data breaches can occur through your own technology — for instance, using passwords acquired through phishing — but often result from breaches at companies that store your data. Bad actors may use this data for identity theft, financial fraud and extortion. Your best defence is to be selective as to which organizations you share personal data with.

    Investment scams often begin with a direct message, often on social media, claiming that you can make a lot of money through a certain investment or asset, such as cryptocurrency. You may then end up investing at a fake investment firm or paying for useless training.

    Safeguarding your finances from cybercrime

    To protect yourself from cybercrime, start by gaining an understanding of the threats. There are several online resources — and sometimes courses offered at community and seniors’ centers — that can help you understand the current threat landscape and how to protect yourself.

    Always install the latest updates of your operating system and software. Also ensure you have a reputable internet security suite, which you may need to purchase separately. In addition, check the security settings on your computer, email, internet and social media to ensure you’re protecting your information.

    Don’t use public networks (like the library) to conduct transactions that involve personal information. If you have no choice, consider using a virtual private network (VPN). Use strong passwords and don’t use the same password in multiple places.

    Avoid clicking on links in emails, social media or texts unless you know and trust the sender — and never click on pop-ups. Use discretion if you get an unexpected link or attachment from someone you know, especially if it doesn’t come with a message or doesn’t sound like the sender.

    Financial institutions don’t tend to send links. If you get a notice from your financial institution, avoid the link or number on the notice and manually check your account or contact the number you would normally use to contact the institution.

    Use a similar approach for so-called technology companies that tell you to contact them about computer issues. Ignore unsolicited phone calls — especially robocalls — and, as much as you may want to help, don’t lend or give money to online romantic interests.

    If you believe you’ve been a victim of cybercrime, stop all engagement with the perpetrator. Secure your computer by changing all passwords and running virus and malware scans. Contact your financial institutions and credit agencies and report the attack to the police and IC3.

    If you believe your identity has been stolen, report this to the Federal Trade Commission at IdentityTheft.gov. Be sure to document everything about the attack and what you did in response, such as who you contacted and when. Afterward, you’ll want to monitor your bank accounts to ensure there are no strange transactions.

    What to read next

    This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

  • Vanguard finds more Americans are treating their 401(k)s like emergency funds — here’s what to consider before making a hardship withdrawal

    Vanguard finds more Americans are treating their 401(k)s like emergency funds — here’s what to consider before making a hardship withdrawal

    Life doesn’t always go as planned. Maybe you lost your job or you’re facing uninsured medical expenses. And maybe you’ve already run through your emergency savings.

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    It may be tempting to tap into your 401(k), especially if you still have a few decades to go before retirement.

    But should you?

    More Americans are treating their 401(k) retirement savings like an emergency fund. That’s according to a preview of Vanguard’s How America Saves 2025 report, which says that 4.8% of participants initiated a hardship withdrawal in 2024, up from 3.6% in 2023. The full report, based on nearly 5 million defined contribution (DC) plan participants, will be available in June.

    A hardship withdrawal is a one-time withdrawal from your 401(k) for an “immediate and heavy financial need,” according to the IRS. This lump sum is limited to “the amount necessary to satisfy that financial need.”

    Why are more Americans tapping into their 401(k)?

    In 2024, 401(k) hardship withdrawal rules changed in accordance with the Securing a Strong Retirement Act of 2022 (SECURE 2.0).

    “Given that it’s now easier to request a hardship withdrawal and that automatic enrollment is helping more workers save for retirement, especially lower-income workers, a modest increase isn’t surprising,” noted the Vanguard report.

    Overall, despite a “few signals of a possible uptick in financial stress,” the report noted that participants are “generally resilient” and “maintain a long-term approach to retirement saving.”

    That could be, in part, because of the growing adoption of automatic enrolment (where contributions are automatically deducted from your paycheck) and the growing use of professionally managed allocations, which has helped to increase savings while improving “age-appropriate equity exposure.”

    However, these numbers reflect the economic trends of 2024, including real GDP growth, moderating inflation and low unemployment, along with strong consumer spending — though household debt continued to rise during the year.

    But the economic outlook isn’t an sunny in 2025, with analysts lowering their GDP forecast for 2025 and raising the probability of a recession.

    So it’s possible that hardship withdrawals could increase in 2025. “Given the current economic climate, a greater number of participants may be requesting hardship distributions from their retirement plans,” the IRS currently states on its website updated last month.

    Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it

    What you need to know about hardship withdrawals

    Generally speaking, a hardship withdrawal is considered a last resort. If you’re thinking about going this route, you may want to exhaust all other options first.

    If you’ve already used up your emergency fund, you may want to consider other sources of income. For example, if you have two vehicles, could you sell one of them? Could you take on a side gig to earn extra money? Could you get a roommate to cut down on household expenses?

    You may be able to withdraw from your other retirement savings, such as a Roth IRA (that could be preferable to a hardship withdrawal, because these contributions have already been taxed). You may want to consult with your financial advisor to crunch the numbers.

    Another option is a 401(k) loan, which you have to pay back — but at least the interest you pay on the loan goes back into your account. However, not all plans offer 401(k) loans; you’ll have to check with your HR department to see if this option is available to you.

    When you make a hardship withdrawal, that money is considered taxable income. Plus, you’ll be subject to a 10% early withdrawal penalty unless you’re age 59½ or older or qualify for another exception. These may include the birth or adoption of a child, a federally declared disaster, or total and permanent disability.

    You may also be able to take one penalty-free withdrawal of up to $1,000 per calendar year for personal or family emergency expenses, but you will have to repay the distribution within three years.

    There are also the long-term costs of hardship withdrawals. You’ll lose out on the compounded earnings you could have made from that money if it was still sitting in your account.

    If you’ve exhausted all other options and still decide to go ahead with a hardship withdrawal, talk to your plan administrator so you understand how it works and the potential consequences.

    What to read next

    This article provides information only and should not be construed as advice. It is provided without warranty of any kind.