Category Archives: Financial Health

Stay Away From ‘Add to Cart”

Online shopping can ruin your budget.

Used to be if you wanted/needed something, you had to get ready, and drive to the store to get it. Now, with the internet….and there are many, many wonderful things we have now to thank for the internet, however, shopping online, and the convenience of it, can truly ruin your finances.

It is so easy, any time of day or night, to open your computer and scroll until you see something you want/need, and often will, as you scroll through, see other things and click onto the ‘add to cart’ button.

And so, the one thing, becomes two or maybe three, with a charge for your account that needs to be paid within 30 days. So, did you even think of the cost to your budget bottom line??????

The items will, within a day or two, arrive at your door….. the bill for these things will arrive within the next 30 days, and, unless you have the money to pay for the whole order, the finance charges for them will arrive 60 days and beyond…..

So….. before you shop online,……..before you click on the ‘add to cart’ button……. know, for a fact, that you can pay in full for the items you’re putting ‘in the cart’.

Stick to your budget…… be disciplined……. it’s to your benefit.

Are You a Saver / Your Partner a Spender??

You’ll need to get on the same page quickly……

You save, your partner spends……. now what??

Honestly, this is the main reason you should….. before you become a couple….. check these things out.  But since you didn’t, there’s no time like the present.

Gather all of your bills, anything financial, savings, retirement accounts, checking accounts, credit/debit cards and bills….. ALL of the bills….. no hiding bills from purchases made unbeknownst to your partner.

Start adding up the bills… outstanding balances, and new bills not received (show the receipts for these).  Add them up….. really, all of them. Now, hide or cut up the credit/debit cards. Use cash only, and continue to use cash only until all the credit cards have a zero balance. Yes, how ever long it takes.

Once that is done, put the amount you’ve been paying those bills into your savings instead. You need an emergency fund of a few thousand dollars to cover only emergencies such as a dental emergency, a plumbing issue etc.

Then you’ll need to save at least 6 months of your income (eventually 9-12 months), should you lose your job or for a unexpected medical or family leave.  This way you will have ‘your income’ ready and waiting for that time.  But remember, this is money for living expenses only, no outside entertaining or eating out, just rent, utilities, food, insurance, car expenses. Nothing else!

By this time, you will both know what is going on financially in your relationship.  A must for all couples.  And should you need to dip into the emergency or 6-12 month reserve accounts, you’ll need to replenish whatever you took out.

If you’re in a relationship now, but not married yet, now is the time to do this, before you ‘tie the knot’.  In that way you won’t run into any financial surprises down the road.

 

Prenup – What Is It??

Getting married?

A Prenup is a legal document drawn up because either one of the couple getting married ‘has money’…… whether it is ‘family’ money or money held in a trust for them or maybe because one of them owns or co-owns a business.

The Prenup will keep whatever that money is and however it is involved with the person, it will keep it totally separate from the marriage money, and in the event of a divorce it will also keep it ‘safe’ from any payments or sharing of it to the other individual.

The Prenup is drawn up and signed ….. Before….. the marriage takes place.

And yes, sometimes it may seem unloving or cold or some other adjective to describe it, but it truly is not. It is a ‘vehicle’ to keep the money as safe as it was before, during and after the marriage.

The ‘other’ person of the couple will usually share in the benefits of it during the marriage, ie: a home, car, clothing, entertainment etc, but should the marriage dissolve for any reason, that money is safe from the divorce and any ramifications of it…… as though it weren’t there.

If either of the couple has money or owns a business, a Prenup is definitely something that should be drawn up legally and before you say ‘I do’.

De-Clutter For Less Stress

Start clearing out…….

If your home has too much in it… too much furniture, too many clothes, duplicates (or more) of the same things……  then it’s time to de-clutter.

We often, and unconsciously, collect things we truly don’t need or won’t use…it’s human nature. But what it does actually is it brings stress into your life. Your home gets bogged down with stuff. Stuff you bought because of instant gratification, or trinkets you bought on a trip, or clothes purchased on sale because of the price, but actually don’t fit properly, or worse, you don’t love on you. Again, human nature.

If it’s knick-knacks, it means you have to dust them, if it’s clothes your closet is jammed with unworn items causing an ironing job each time you wear an item, or shoes and boots have become a mountain of those you forgot you had and so bought another pair (hidden at the bottom of the pile). Or maybe it’s kitchen items you have duplicates of, or gadgets you use only at holidays or maybe once or not at all.

If any of this sounds familiar, then it’s time to clear things out.  And though it could appear as an ominous task, just take it category by category….. your bureau one day, your shoes another, closet next, kitchen another day and so on.

As you do this, think of the money you spent on all this stuff…… okay, lesson learned.

Start clearing, see if you know someone who can use the item, or donate it to a shelter (they can use most anything, even hangers).  Doing so, gives you a dual good feeling, your home is becoming clutter free and you’ve helped others.

Moving forward only purchase what you truly love, truly need. Stop impulse buying or buying something just because it’s on sale or that you’ll barely use.  Think of the cost and how much use you’ll get from the item…..  If it costs $50. and you use it once, it costs $50 for its’ use, but if it costs $50. and you use it dozens of times then it’s a small cost for its’ use.

With less clutter in your life, you will have less stress……and more money in your savings account.

Don’t Wind Up Being House Poor

Don’t strap yourself with too much house.

There are definitely some things you need to  consider when choosing a home you’d like to purchase. Location is right up there on top, and of course, price and size.

Since it’s best to put at least 20% down payment on it to avoid mortgage insurance. Keep your budget in mind as you shop for a lender who will go to the high side of what you ”can afford”. You set you highest price keeping in mind that there are always costly surprises over time, and you need to be sure to have money set aside for the ‘what ifs’. So stay under their figure.

Don’t go for all the bells and whistles. They are where the dollars rise sharply in the listing price. And remember, once in there, you may want something different such as paint, carpet, flooring, larger shower etc.

Don’t buy too many rooms. Remember, you have to fill them and heat/cool them….and pay taxes on them. It’s always nice to have an extra bedroom which can be utilized in many ways. This home may be your forever home, but you more than likely will use it at a first step towards home ownership, giving you ideas and lessons as you move forward.

Remember, your PITI, principal, interest, taxes, and insurance should be no more than 30% of your take home income, and ideally, 28%. This will keep you more in line with staying within your budget.

You’ll want to put aside approximately $500. for a home inspection.  This will tell you what is wrong with the property and approximately costs to repair it.  If it is too costly, now is the time to have the sellers pay for the repairs, or give you the money to do so. A home inspection is very important, don’t neglect it. Also, don’t forget that at closing, you’ll need approximately $5,000 for closing costs (Registry of Deeds, Lawyer, etc).

And it is a very good idea to do a Homestead Act at the time of closing. It costs only $35. and is money well spent.  Mention it to your Lawyer that you want it at that time, and it will protect your home from anyone who may sue you. It covers about $300,000. and protects your home for as long as you own it.

 

 

 

 

Do Not Let Your Finances Stay In Limbo

Think… then…. Do

You’ve been budgeting and saving. All good. You’re staying within your budget and your savings are growing as is your retirement account(s), but…… what if something should happen to you?

We all know we are here now, but eventually, we die. The thing is we have no idea when, so you should be prepared for the ‘what if’, the ‘just in case’ the inevitable happens sooner rather than later. It’s easy to do, and best not to chance leaving your hard earned savings in limbo and then the state will take over and divvy it all up to relatives or those you don’t want it to go. There is a ‘listing’ of the order in which it goes to these individuals.

It’s best you choose. You have the chance to do that now, and it can always be adjusted for life changes (marriage, a new child, divorce, or if you no longer want a certain person(s) to inherit your savings.

First, put anything you can into a ‘Revocable Trust’, and put a beneficiary(s) on everything you can. A Trust is usually drawn up by a lawyer, but can be done using download trusts found online and is legal is some states. Revocable means you can change your mind about what is already in the Trust should you decide to do that. A Trust is also private. And, it does not go through Probate so there are no court costs.

Start with any banking accounts…. put beneficiaries on each. There is no cost to do this. A retirement account, in some cases, can also have beneficiaries at no cost, so check, and do.

Doing this will give you peace of mind knowing that your financials will get into the right hands, (the ones you chose), should the need arise.

Readjust Your Budget

Constant monitoring of your budget…..

Most of us live on a budget and while some can and do live within their means, others can’t or don’t.  The thing is, if you do, great!

But you have to continually monitor the budget  make sure you’re not overspending thus starting the slippery slope of a financial mess. However, if you can’t or don’t live within your means, you need to get on track immediately.

Prices go up, and we, basically don’t have any control of that, so what we need to do is subtract some of our ‘wants’. This may be temporary, that is if we will be getting a raise in pay (although that isn’t always the case). So…. write down all your expenses – every single one of them – putting them on paper is usually an eyeopener.

Making three columns – one for annual, one for monthly, and one for occasional expenses. The occasional list is usually the one that can be clipped or eliminated completely (entertainment, eating out/take out gifts, etc). Now add the columns putting the total of monthly and occasional columns together with the annual. This gives you your complete annual total.  Are you within your income figure??? If not, start with cutting back on the occasional list of things first. Doing this will, hopefully, bring you within range of your income.  Now……  stay within those limits.

The revamping of the budget need to be checked periodically. If not, you will find you overspend here and there and that’s when things start to get out of hand.

Be disciplined with this….. it’s to you advantage.

Obligations When You Lease An Apartment

It’s their apartment, they’re letting you lease it…..

That said, you have certain obligations to fulfill….. from the signing of the lease until you vacate.

In order to get the apartment, the owner checked you out,….. the information you gave and your credit score. This is done so that they know how much of a risk they’re taking by choosing you as the one who will be staying on/in their property. It is all legal and above board.

You sign a lease…. a legal document…. stating that you are leasing for a particular time frame at a particular price.  You probably have also paid first, last and security deposit. First month is obvious, last is actually to the benefit of both…. them so they have that last month’s rent and you so that the rent you would have paid that month gives you a start for the cost of the next place you move to, and the security deposit, which is usually equal to a month’s rent, is held by the owner for the purpose of any damage to the apartment done by you so they have money there to pay for the damages. If there is no damage you get the full amount back plus interest (it’s the law), or, if there is some damage, the cost is deducted and the remainder is sent back to you.

When you do leave a rental unit, you should leave it clean.  You don’t need a cleaning service, but it should be left ‘sweep clean’…. meaning that when the next tenant moves in, they can put their boxes etc on the floor and feel okay with that. They will clean the cabinets and bathroom again, and sweep and mop again, but you should leave the apartment completely empty and cabinets completely empty. When you move into your next rental, you would expect the same.

So remember, while you are renting, save a bit each month specifically for the first, last and security deposit, and of course the movers, so that when the time comes, you’re all set to pack and go….. and have the money already there and waiting.

The Impact of Paying Only the Minimum

Credit Card Savvy…..

You have a credit card…. do you know, really know… how to use it to your advantage?

The Savvy Rule…… Use your credit card for purchases you know you can completely pay for when the bill comes due. Otherwise,…… do not use it.

Reason???    …… You get the benefit of generating a high Credit Score.  You get the benefit of possibly getting something on sale so you save money there, but unless you pay for the item(s) in full when the bill comes due, you won’t.  You’ll wind up paying finance charges on the portion you don’t pay along with additional finance charges added each month on the unpaid balance.

And, if you’re late in paying, even one day late, you are charged a hefty late fee as well….. so the sale item (or whatever your purchases are) are no longer a bill for just the purchase(s), but rather a bill for the additional fees.

This is now called a financial nightmare!  If you pay the minimum or anything other than the full balance the fees pile up, and continue to pile up so you’re in a financial hole that can take years to climb out of.

And….. your Credit Score will take a nosedive causing headaches when you want to get an apartment, mortgage or a loan…. as they check out your history and if your’e too risky at repaying, then they’ll deny your request.

So…….  Use a credit card wisely……..   Charge —- then pay…..  Pay the full balance when you receive the bill.

If you can’t do that…… then don’t use the credit card!

The Impact of Inheriting Money

Yes, …. Impact.  Because there are timelines and taxes.

Hopefully, you’ve been saving all along. Putting money into an emergency fund, a 6-12 month income fund should there be a job loss, and, of course, a retirement fund. Along with all that, maybe you’ve been saving for a house, or children or college. Perfect.

Now, someone dear has passed and left you a sum of money. Maybe it’s in a 401 plan, or another retirement vehicle. Maybe it’s in a bank account.  You need to know what happens when it now become yours. Do so as soon as possible by calling the company or bank where the money is held.

You need to tell them you have inherited it. Ask if it needs to be changed into your name and how. Ask how long you have to disburse the funds and any tax ramifications when you do. Ask if, in the case of a 401 and the RMD amount has already been accessed by the deceased person (they started that at age 72), there are rules there for you to follow on how it will be disbursed to you and when. Or, in some cases, you can have the part of the account left to you re-titled to your name, and continue the account that way, hopefully adding to it yourself as time goes on.

You shouldn’t wait too long before you alert the company(s) that the person is deceased. You will, of course, need proof. Most retirement plans have beneficiaries in place set by the owner of the account. You will need their death certificate, and your ID info. Have this ready when you make the call.

Hopefully, before you start taking the money, you have a sound financial goal for it. Surely your benefactor wouldn’t mean for you to spend it foolishly…. after all, they more than likely struggled somewhat to save it. So, treat it wisely and make your benefactor proud with your choice(s).