Category Archives: Financial Health

In The Blink Of An Eye

Stuff happens……. expect the unexpected

Things can change quickly – in the blink of an eye.  Circumstances can change along with your priorities.  Because of what is now facing you, you have to shuffle things around, making things work while you’re figuring things out.  You’re not alone.  It happens to everyone at one time or another.  The thing is if you’ve been planning and preparing all along, the stress of what happens in life will be a little less stressful…if not, you can still get through this….just differently.

First…..  take a few deep breaths.  Focus on what is important.

If you find yourself out of work, your immediate goal is to keep a roof overhead, and food in the fridge.  If you know it will be a length of time, call your landlord or mortgage lender.  Explain the circumstance, and see if they can accept a different payment option.

You will still have to pay for your rent/mortgage in full, but letting them know of the situation you’re in might get you extended payment dates, or less payment each month until you can catch up.

It’s probably a hard phone call for you to make, but put your pride in your pocket, stay calm, focused, and understanding to their side too.  Your rent/mortgage goes to payments they pay out. It’s the chain of money.

And no matter the outcome of the call, say thank you, thank you for your time and understanding.  If you got a negative answer in the phone call, you may get a call back in a few days after they’ve thought of your plight, and have now come up with a payment plan you can both work out.

Make phone calls to any creditors, car loans, credit cards, etc.  Keep all up to date of any progress being made.  They make notes on your account, which will stop creditors from calling.

Food in the fridge…..  Use what you have on hand.  Be recipe creative.  At the supermarket avoid the snack aisle.  Eat less meat, eat more vegetables. Keep meals simple yet nourishing.  And do not waste any food.  Use leftovers within a few days, if not, freeze to use at a later date, maybe when you’re busy….just pull out the leftovers and reheat.  No cooking that night.  Leftovers in the fridge or freezer do not mean from a night of dining out or take out… cooking at home is cheaper.

Living on bare bones….. This can and needs to be done now.  No coffee stops, no quick stops for incidentals, no manicures/pedicures, no hairdresser, massages etc.  No eating out, take out, movies, shopping sprees…. nothing…..other than your overhead, and food (cooked at home).  Of course, medical/dental as needed is a necessity.  The idea is, you have no income, so don’t spend what you don’t have.  Don’t do that to yourself. Because if you do, it has to be paid, by you, adding in interest, late fees, and the vicious cycle of debt is added to your plate.

This too shall pass.  Think positive thoughts.

 

 

Certificate of Deposit …. CD’s

What to do when a CD matures….

A Certificate of Deposit also known as a CD usually has a better interest rate than a regular savings account, or a checking account.  That said, unlike a regular savings or a checking account, it does have other stipulations.

They have ‘Maturity Dates’, meaning they have to stay put for the length of time of the chosen CD.  Usually they run 6 months or more, but if the bank is running a ‘special’, sometimes they have a 1 – 3 month one.  How you decide is knowing when you might need your money.  If it’s a savings that you’re leaving for a while, you may choose a 12 month one.

You may not want to choose one more than 2 years, because interest rates change often and you may lose out on a better rate during that time frame that yours is locked in. So think first, then choose one that fits for you.

You can close it out earlier, but with penalties…..usually about 3 months of interest.  Some banks allow it and some don’t ….so check first.

Maturity…. About a month before the CD matures, you should get notification of the upcoming date.  Start checking on the rates at other banks and comparison shop so you’ll get the best  rate for the length of time you want.  If you let the maturity date slide by, the bank automatically rolls it over into a new CD at the current rate for the same length of time.

You can also add to it at the time it matures, then roll it over in the same bank, or a different one choosing a new maturity date and interest rate.

If you’re not sure what you want to do, you can notify the bank that you want to close the CD when it matures, and they can ‘hold’ it as a regular savings (at the rate of a regular savings), giving you time to decide.

CD’s are good because your money is FDIC insured at the bank, and you’re getting a better rate than a regular account.  It’s up to you to choose a length of time.

Cars….Buy or Lease

Is buying or leasing the better option for you?

After you’ve looked around, checked types of vehicles, and prices, and have decided which one suits you best, how are you planning to pay for it?

Don’t forget to check out the previously owned cars, sometimes the car dealership will have their own ‘Protection Plan’.  These can be a good choice, especially if you can get a ‘Company Leased’ car, as they are gently used by a company and their clients, and can save thousands.

Leasing:  You will have to put money down, and then make payments over 2 or 3 years as specified in the agreement with the dealership.  Usually, depending on the chosen vehicle, the down-payment is a few thousand dollars, and the monthly leasing loan is a couple of hundred dollars each month until the maturity date of the lease is up.  At that time, you have the option of turning in the vehicle, but if there is any damage, you have to pay to have it fixed.  Then you can walk away, with no money in your hand, or no vehicle to drive…. but you can lease again repeating the process.  Or, you can choose to buy the car you’ve been leasing,  purchasing it at a price specified by the dealer….taking into consideration money, but not the full amount, you have been paying in the lease agreement.  A car loan would be taken out to finish paying for the car, because you are now ‘purchasing’ the car which would then be yours at the end of the loan.

Buying:  Dicker…Make your best deal.  If your Credit Score is high, you can get a lower interest rate on the loan.  Now, put an amount you’ve decided as a down-payment, the more you put down, the less the monthly payments. Take out a car loan for the balance.  Choose a length of time from 2 years – 7 years…most go with 3-5.  Check a few different lengths of time so you’re sure the monthly payment will fit easily into your monthly budget.

When the loan is paid off, the car is yours and you will receive the Title from the lender.  Until the loan is fully paid, the lender ‘owns’ the car and if you default on payments, the lender can/will repossess and sell the car. When you do receive the Title, put it in a safe place, because when you sell the car, you need the Title. It is also wise to save registration and excise tax receipts as well as any maintenance records/receipts to show a new buyer you’ve maintained the car. Of course when you sell the car, the proceeds are yours to put toward another.

**When the loan is paid off, continue writing a check for the loan amount each month, but instead, pay yourself that loan amount.  Put it into your Retirement, or one of your Savings Accounts.

In either case, whether buying or leasing, before leaving the lot, it has to be registered with the DMV, have plates, and insurance coverage.  Within 7 days it needs an inspection sticker.  You will receive an insurance policy, renewable annually.  It’s an important document, keep it safe.

Getting Along With What You Have

Use what you have, stop spending on more

If you’re trying to get out of debt, your goal is to get your bills to zero balance.  Once that happens, your goal is to save, save, save.

This is done very simply…..  Stop buying. Use what you already have.  Get along on less. These things can be done.  And yes, — you — can do it!

We have all bought clothing items that we wear only a few times, then decide we no longer like it, so it hangs in the back of the closet.  Been there, done that.  Instead, empty your closet. Surely there are several items you have worn only a few times…. or not at all.  Most of us tend to wear the same few things…our favorites.  But start using the other items too. Have a fashion show in your room. Use what you have, pair things with your favorite pieces, making a whole new look.  Put colors together to see how they ‘pop’, layer, add a scarf, belt etc.  And then enjoy the compliments that will come your way.  Do this with a friend, and swap items. Stay out of clothing stores, and stop online shopping and browsing.  Shop in your closet. You’ll save $$$.

In the kitchen, there are so many new small appliances, and gadgets available.  But, if they are rarely used, or if they can be used for one type of cooking one recipe, it isn’t worth having.  Although the latest rage, there are only a few that are truly worth having.  A slow cooker, where you can put the food in, turn it on, it will be ready by supper.  Another is a pressure cooker …. where a pot roast dinner can be ready in less than 30 minutes.  And vegetables in 3 minutes.  A microwave steamer is great for almost anything, and can reheat leftovers in a matter of minutes, without drying it out.  Small gadgets are useful and again the old standbys can be used for multiple tasks. They’ve done so for decades.  You do not need them all, they’ll just sit in the drawer.

Furniture pieces:  When purchasing furniture, find pieces that do double duty…not only useful for what it was meant for, but also has storage, so your room always looks neat.  Don’t overfill your room(s) with furniture pieces.  Simplify.  Less is best.  Change smaller pieces around, switching them into another room.  Swapping things around, even lamps, pictures, etc.,  gives a whole new look.  Fast, easy (and free) redecorating.

 

 

Estate Planning — Be Prepared

If you have ‘stuff’…..you have an estate

Most people think that to have an estate you must have a few million dollars, live in a mansion with butlers and maids and a chauffeur.  Not so.

If you live at home, or have a studio apartment, a 1-2 bedroom condo, or a home of any size; if you have a bank account with $25., or a car, if you have personal items. If you have any or all of these, you have an estate.

Estate Planning is essential for any size estate, even when in your 20’s.  It means you have set up specific legal documents not only designating beneficiaries to inherit your estate should you die, but also setting up health directives for your care should you become too ill to care for – or make decisions at the time for – yourself. These documents can and should be updated…adding to or subtracting from…due to life changes; birth, adoption, marriage, divorce, remarriage, etc. These legal documents are your wishes and will be followed as stated.  This will also mean that should it become necessary to utilize any or all of them, a loved one won’t have to make choices for you, and although trying hard to do the right thing, may not choose what you would have wanted done.

More likely than not, these documents will be in your safe for a long time.  The idea is to have them at the ready should the unexpected happen.  Look over them occasionally making any changes as needed along the way.  We all take our last breath…. we just don’t know when that will be.

You should also talk to a trusted relative or friend about your final wishes, what type of arrangements you’d prefer as to the disposition of your remains (whether you wish to be buried or cremated). You should also tell this person(s) where these documents are kept.

Beneficiaries:  You should have beneficiaries on everything…even your $100. savings account. If you don’t, should you die, what you have lies dormant for 3 years, then goes to the state.  There can be high probate costs and lengthy court delays, and in the end, what is left could go to someone you didn’t want to give it to.  There is a legal ‘chain’ of how the state decides.

Instead, you decide.  Put beneficiaries on everything….(you can change them if you want to).  This doesn’t cost anything to do…check with your bank, insurance policy, retirement account, etc.  You can put Primary Beneficiary(s), and Contingent Beneficiary(s).  The Primary(s), would receive it first, if they have died it goes to the Contingent(s).

Health Care Proxy:  Medical decisions for yourself…directing medical professionals to abide by your wishes for your care.  It also gives the person(s) you trust, availability to your health records and your doctor can speak to them regarding your health.  The person(s) you choose is your proxy…while you are being cared for.

Durable Power of Attorney:  Living document naming one or two trusted people. They will be able to pay your bills, sign checks, withdraw money from your bank account for your benefit and make any legal and financial decisions for you should you be unable to do so for yourself.

Living Will: Your wishes for medical directives, should you become incapable of making them for yourself, due to a catastrophic incident.

Will:  Your wishes as to who will inherit your estate, how it is divided and to whom, and can list specific cherished items and a recipient of your choice for each.  You can also add an addendum (a change), to it, rather than rewriting a new one. Wills usually go through Probate.

Trust: There are two kinds, Revocable and Non-revocable.  Revocable means you can make changes.  Non-revocable means you cannot.  There are also different types of trusts within each.  It is/can be done in place of a will. A Trust will avoid probate costs.  A trust is private. No one, other than those mentioned in the Trust will know of its’ contents.

All of the above, except the Non-revocable Trust, can be changed.  At every life change, they should be looked over, and updated if necessary.  Or, most certainly, if you, yourself want to take someone off, due to family dynamics. And, it is also a wise idea to add a phrase to avoid anyone (without naming names), who you don’t want added to it, or in any way receive any part of your estate from getting it.  The following is an example:

“Let it be known that any and all other person or persons not mentioned in this My Last Will and Testament (or Trust), I have omitted purposely and not through accident or mistake”.

Having each of the above, gives you peace of mind, knowing that your wishes, whether you are ill, or have passed away…. your wishes will be followed.

 

Thinking Of Adding To Your Family?

This early to do tip may help avoid a strain in the budget.

Babies are cute….and costly.  Sometimes finding they’ll be arriving just over the horizon comes as a surprise, while others are more or less planned for. In either case, there is approximately 9 months to get used to, and prepare for, the new arrival.  But, if possible, plan this ahead.

If there are two incomes now, that will change — maybe for a few weeks or months, or maybe permanently – so one or the other of the couple can stay home with the baby full time.

If the Mom is returning to work in a short time, there will be child care costs.  And further on, day care, or pre-Kindergarten.  All very costly….. because you want to choose only the best for your child.

If you are one of the couples who get to plan the upcoming event, several months before you make set plans, figure if doing this…or doing this now…will fit into your budget.  Babies need diapers….tons of diapers,, wipes, washcloths, formula, clothing, car seat, crib, highchair, some stimulating toys, not to mention all the doctor visits for check ups and shots etc., etc., etc.  The list goes on and on ….and grows…and grows….getting more expensive as the child grows.  These are definite, normal, known costs that have to be added into the budget.

So, before all is said and done, whichever of you will be staying home for whatever length of time you will, starting now, take that paycheck…the paycheck of the one to stay home…put it away in a savings account.  Do so for a few months, to be sure….to make sure….you can live with only the paycheck of the other…..   But don’t forget to add in all the baby things, because there will be three living with one income.  And don’t use the money you’re putting aside from the stay-at-home parent.  Remember, all expenses will come from only the one income.

Because this is how you will have to budget once the baby comes, it’s best to know you can handle it that way beforehand.  The money from the other paycheck can be a start to their college fund…. but remember, each child you have should also have a college fund….and, and. and.  Each child needs these things, some can be handed down, but some can’t.

The Love Of Thrift Shops And Yard Sales

Second hand but new for me…..

Thrift shops sometimes called consignment shops are a treasure trove of amazing things, at amazing prices…other fun places to shop are yard sales, and weekends in Spring through Fall, there could be any number taking place….my go to place(s) when I have to replace something.

Having been to all, an array of items, some still favorites, are scattered about my home. Pride takes over when a specific piece is mentioned by someone, and I can rattle off exactly where I got it, and sometimes the price…..it’s part of the story behind the item.

Decades ago, my mother shopped in the neighborhood second hand store, and so she wouldn’t waste a quarter on the item, she had that child (there were 7),  go to the store, with the quarter and specific instructions of where she had ‘hidden’ the item so we could try it on and see if we liked it. Dutifully we went to the store and, if it was something that was liked and it fit, we’d buy it. It was then put in a used (usually crinkled) bag. We left the store with the purchase along with the hope that no one we knew saw us, because they’d know we shopped at the second hand store. The item was washed, and we wore it…..though second hand, it was ‘new’ to us.

Today, however, to me it’s a badge of savvy shopping…. I take pride in bargain hunting, and the better the bargain, the better the story behind it.

If you’ve never been, make it a point to start checking them out.  Not only a fun ‘field trip’, but surer than not, you’ll come out with a bag…or two, and a few stories of your own.  Just don’t overbuy….only buy it if you need it.

 

 

Have Your Money Work For You

Ways to have your net worth add up on its’ own

Bank interest is compounded on a daily, monthly, or annual basis.  Daily is best.  As time moves forward, your interest is gaining interest.  Keep adding to the account and it will add up faster.

Make additional payments to your mortgage.  Be sure you make them as ‘Principal Only’ payments.  Make them in any amount and as often as you can.  They will not only reduce the length of the loan, but they will save interest charges as well….if you do this often enough, you can save thousands of dollars over the length of the loan.

Most who have a mortgage have it for 30 years.  From the second payment on, you can pay it off in 27 1/2 years….saving 2 1/2 years, and thousands in interest.  Tell the lender that instead of paying your mortgage monthly, you want to pay it bi-weekly, (1/2 the mortgage amount 2 x a month plus 2 more half payments a year, as the calendar falls,…which totals 26 payments).  It’s just a phone call and they can switch it over.  With a regular 30 year loan, it’s 12 payments per year.  Bi-weekly payments are made every 14 days (52 weeks divided by 2 = 26 payments a year. The 25th and 26th equals an additional full payment…credited totally towards the principal only.  It’s just a matter of setting it up, and it saves thousands in interest costs.  Twice a year, usually May and October, but as the calendar falls, there is the extra 1/2 payment needed, so make sure it’s in your account to cover it.  You should make a habit of checking on available totals.

If you are disciplined with your credit card (paying in full and on time), this, of course, will save rollover interest fees and late fees.  But should you need to make a purchase which is necessary yet a little more costly than usual, check your closing date, and make the purchase a day or two later than that. In that way, you’ll have the entire billing cycle, plus the two or so weeks after that but before that purchase is due to be paid.  It gives you a few weeks extra to put money aside to pay in full when the bill does comes in.

If you pay your car insurance in full when the bill comes due, you can usually save 5% on your comprehensive coverage — a savings of about $40.-50. annually.  With a good driving record, there is a discount, as well as others…. check with your insurance agent to make sure you’re getting all the discounts you deserve.

 

Trying To Keep Up With Others??

Are you guilty of pretending?

Pretending you are ‘richer’ than you are is a bad idea…a very bad idea.  It only leads to financial disaster… your financial disaster.  It is doubtful that any of those you’re trying to impress will help you get out of debt.  Do not pretend.  Do not do it.

Trying to keep up with others by spending on things you know you can’t afford, such as a more expensive car, or a bigger house, or gatherings you can’t afford to host, or pricey clothing, electronics etc, is a place where so many have foolishly put themselves.  Oftentimes, their ‘friends’ disappear from their lives, but the nightmare of keeping up with payments for the ‘showoff things’ has dug such a financial hole, it can take years to get out, or sometimes things are just repossessed.

Even pretending on a smaller scale is not a good idea.  Spending on dinners and drinks out with friends, buying ’rounds’, pricey gifts, even entertaining at home, may seem small at the time, but it all adds up and has to be paid for when due.

A potluck dinner where each brings a favorite food shares the cost  is a fun way to get together inexpensively.  Food items can be in a ‘theme’, Italian, casseroles, BBQ etc.  Serving beer and/or liquor can be pricey.  Entertaining with each bringing what they drink, and an appetizer/entree will be just as enjoyable a gathering.  Or a brunch on a Sunday morning each bringing their favorite recipe dish is a fun and relaxing way to gather. Those who ‘have anything to squawk about’ can stay home.  They will come around sooner or later, and join the group again, bringing their offerings too.  Start a trend.  You’ll be gathering, having fun, and making great memories.

Children’s birthday parties have become a major event!  Jumping houses, bowling, arcades etc.  are very pricey and not necessary.  A pizza party at home, cake, ice cream and only a few best friends.  Remember, each child you invite, is another gift you have to give when your child is invited to their event.  The guest list and gift giving list only gets longer, and more out of hand financially, because everyone is trying to outdo the others.  Get a few of the mothers together to discuss paring down guest lists.  Then listen, you’ll hear a audible sigh of relief from them.

Be yourself.  Don’t pretend.  Live within your means, even if it’s meager. You’ll be happier and less stressed out.  And you’ll have zero balances …… and, savings account(s).

 

There’s No Rewind Button

Saving takes time…start early

In life there are so many things to ‘save up for’….. that being said, the best way to tackle this is to start saving as early as possible. And remember, every penny counts.  Sometimes you’ll think…. “The hurrier I go, the behinder I get”.  But don’t get discouraged.  Keep plugging away.

Put money in each of the needed savings accounts so each one will show you a bigger balance….. even a little bigger is better than not. It won’t get to what you want/need it to be overnight, but with consistent deposits, it will. Be diligent about saving.

Your choices along the way, and how you handle money by budgeting and saving will matter as you move through life.  Being disciplined, paying yourself first, and staying within a budget is key.

The accounts you have saved for ‘liquid emergencies’ and 9-12 month cash reserve may or may not have been used.  If used, they should have been replenished and should be there.  The cash reserve account, as retirement begins, can, if needed, be used to supplement your social security or pension income until you are 72, when your RMD kicks in. That way, the money you have in your retirement account(s) continue to grow.

At this time, 62 is the earliest age to begin collecting social security, and each year you put it off, the amount you’d get will go up about 8%… so the longer you can put it off, the better. That said, the Social Security System needs fixing…now…so unless and until this happens, you shouldn’t ‘count on’ receiving it.  Count on yourself…be disciplined and diligent about saving for your future.

You don’t want to get to only a few years away from retirement and realize that you don’t have enough money saved for how you thought your retirement years would be. Depending on what type of retirement account(s) you have, most can’t be touched until age 59 1/2.  Others need you to notify them when you are 72, to set up an RMD (required minimum distribution) withdrawal each year, and of course, there will taxes to pay on the amount. They will figure the annual amount. You can choose to receive it in a lump sum, or in equal monthly amounts. It’s up to you to set it up to begin. If you neglect to do this, it won’t start and there will be huge penalties and tax ramifications, meaning a good chunk of the money you saved throughout the years, is now wasted.

If you save every cent you can and do this right throughout your working years, you will be able to enjoy a retirement lifestyle you’ve always dreamed of.