Category Archives: Financial Health

What are Your Goals in Life?

Figuring Your Goals and How You Pay for Them….

We all have goals…. purchasing a home, travelling, buying a car, college, a wedding etc.

These all cost money, and that said, we should start saving for our goals.  Organization of saving for different things is important and the simple way to do this is separately.  Open bank accounts and each paycheck add something to each.  This way, you see where you are with the amount you’ve saved versus the amount you need for a particular goal.   It will also prevent you  from using money intended for a particular goal and when you need it, it’s not there….aka: robbing Peter to pay Paul.

A good idea is to put you goals in order of importance….. and of course, sometimes plans change and the goals can (and should) be shuffled around.  The idea is to add to each ‘goal account’ every paycheck…. direct deposit is a good idea as it will automatically be deposited and ‘what you don’t see, you don’t miss’.

The important thing is to save….. every penny counts….. It’s Common Cents!

Thinking of Getting a Credit Card??? ……

Don’t…….. at least not until you read further….

Getting a credit card has responsibilities that go along with it.  So, unless you’re able to take them on, put off getting one until and unless you’re going to adhere to some things which will keep you out of a financial debt nightmare.

This is for your own benefit.

A credit card is a direct link to your Credit Score.  It shows how you handle your expenses and payments of them.  A Credit Score can, in many instances, either get you a car loan, a mortgage, rental apartment, college loan etc….. or not.

There are numerous cards available….. most have ‘rewards’….. perks that keep you spending in order to rack up the miles, or cash back, or whatever else it promotes.

There are also annual fees to some cards….. steer clear of those.

And they all come with rules of their own….. if you don’t adhere to them, what you think you’re getting by using the card can change drastically from what you think.

And they all have very staggering fees …… for not paying the whole balance before the due date there are finance (interest) charges tacked on to your next bill.  If you’re late, even a day late with getting the payment in, there are steep late charges. These charges are a complete waste of money!

So…… Unless you are sure, very sure, you can use the card only if you know you can pay the full bill before the due date, you probably should not open a credit card… yet.

If you do, and pay only a portion, or worse, only the minimum, then be prepared for as much at 27% (and more) interest tacked on the balance you don’t pay.  And each month, it continues to add on, so that eventually, your purchase is only a bit of the bill you’re looking at, and the rest are interest charges, and possibly late fees if you don’t pay on time.

This would be a financial hole you want to definitely avoid.  It’s a nightmare to dig out of.

Making Budget Decisions

What to keep vs What to eliminate

Setting up a budget is fairly easy… some things are common sense: Rent/Mortgage, Utilities, Food, Medical, Car Loan/Insurance, Outstanding debt etc.

Others can be downsized or eliminated completely.  Depending on your income, and the way you’re currently handling expenses is key… and how you make decisions about what to cut back on or cut out completely.

After figuring what ALL your expenses are (including weekly, monthly, annually), and adding those figures, compare the total with your annual take home pay.  If your expenses are less, kudos to you and keep up the good work (you’re living within your budget)!

If your take home figure is less, it’s time to cut back on things that are unnecessary…. stops for coffee (make it at home), dining out or take out (stop completely or dine out on only a special occasion, gift giving (cut your list down to only family members, and explain you’re trying to get on track (there will be those who will breathe easy and might even admit to you that it helps them too).

Once you do this and you’re getting the hang of it, you’ll think of other ways you can cut back.  Doing this allows you to, if you have outstanding debt, you now have ‘extra’ money to put on that. This, of course, means that your debt will decrease and you will…eventually…have that money to put into savings.

Savings is so important in so many ways.  Saving for an unexpected emergency means that when the emergency arises (and they do), you won’t have the stress of ‘How am I going to pay for it”, because the money will already be set aside.  Aim for $1,000. in that account.

A Reserve Income Savings Account is for when/if you are out of work for a time. With no income coming in, this account will cover your necessities. Only your necessities…rent/mortgage, utilities, medical etc.  Aim for 6-12 months, but as that figure may be daunting right now, aim for 3-6 months.  You’ll be so glad it’s there should the need arise.

So, set up a realistic budget, and live within your means.  That of course means you don’t spend what you don’t have.

It’s common sense!

 

Getting Started….

Learn to simplify.

If your finances aren’t in order, chances are other facets of your life are in disarray as well.  If you learn to simplify your life, you will have less stress and things will fall in to place.

Gather your bills, and list all of your outstanding debt.  Make a complete list of ‘have to’s…. rent/mortgage, utilities, food, medical, car insurance, etc.  Anything other than the ‘have to’s will have to get cut back or get cut out of your budget completely.  Until your finances are on track, meaning spending less, getting rid of debt, and saving.

Add all the figures in the ‘have to’ column, and that is now your working budget.  Any income over that should be put to pay down your outstanding debt.  Once that is done, the figure you were using to pay down the debt should be put to your savings.

Until you have a handle on how to save, and have at least $1,000. in an emergency fund, any incidentals are out.

Paying down your debt, and seeing this happen should be a good feeling for you.  Being debt free is awesome.  And, having an emergency fund….used only for that, such as a plumbing issue, new tires, a dental emergency etc. is also a good feeling and it takes some of the stress at that time out of your life, because you’ll know you have the money set aside for the emergency.

Once the emergency fund is set aside, open another account for  6-12 months of your income.  It sounds daunting, but it is doable.  The reason you need this is just in case you are out of work for a while without an income, or should you lose your job.  Having this money set aside will allow you to live financially unaffected while you look for work or recover from a medical issue. In either case, you’ll have enough stress without worrying about how to pay for the roof overhead and feed yourself and family.

This does take discipline, but once you begin and then see your outstanding debt getting less and less, and your savings growing each paycheck, then you will become determined to do this.

It is after all a gift to yourself.  And it is doable.

 

Is Buying A Home In Your Future?

What you need to know…and do….beforehand.

You want to own your own home someday.  A dream of many.  You need to know what is expected of you first.

You will need a down-payment of 20% (or more) of the cost of the home you’re choosing. You will also need approximately $5,000-7,000. for other costs associated with the closing: home inspection, legal fees, title, Homestead Act, etc.  All necessary to complete the transaction.

The 20% (or more), is the down-payment figure used, because if you put less down, you will have to get Mortgage Insurance (which will have to be paid monthly until you reach your 20%. The home inspection cost (approximately $500.) is for your protection. A registered home inspector is hired by you (before you actually purchase the home), and he/she goes through the house thoroughly and lets you know what needs to be repaired/replaced now or in the near future and approximate cost for each.  This now gives you the opportunity to ‘back out’ of the deal If there are costly repairs coming up, that may be out of range of your budget.  Or, you could negotiate with the sellers to either make repairs or deduct money from the price of the home and you will handle the repairs on your own.

The closing costs are just that…. costs at the time of closing the deal.  You should have a lawyer, and he/she will draw up papers and go to the Registry of Deeds to register the purchase/sale.

So that is where the figures of at least 20% plus legal costs fits in.

Now, do you have a few thousand dollars (for a lawnmower, some plants etc or if you want to paint the living room or kitchen?  This would be a good idea too.

It sounds ominous, but truly it’s doable.  Be disciplined about saving and you’ll get there.

And when you have the money you need set aside, then shop for the best rate on a loan and a reputable mortgage lender.

Soon To Be A Couple?…..

One income becomes two…. What You NEED to know first!

Before you become a couple for life, talk finances!!  If you don’t, it is a guarantee that the subject will come up down the road, and then…. It’s too late!

If the relationship is getting serious, NOW is the time to bare all….. finances, that is.  Before you tie the knot in a marriage, it is imperative that you know all about your intended’s finances… and they yours.  It is very important, and did I say imperative??  Yes, imperative.

This is because we all earn, save, spend differently. And if you say ‘I do’ before you know this, it can cause you major headaches, arguments, and financial stress. So, it’s best to be up front and truthful on what you (both) earn, how you (both) save, and how you (both) spend.

If you’re not on the same page now, you never will be.  If one is a saver and the other a spender, then there will always be friction as to what is spent, and what is saved.  Honestly, if you cannot get past these issues now, then hold off on the wedding plans.

This is imperative because the spender, if he/she is spending more than their income, not on a budget, and doesn’t pay in full and on time for what was purchased, they’ll have a lower credit score than you who prefers to stay within a budget, save rather than spend, and when you do spend, you pay in full and on time to avoid late/finance charges.

You will also have ha higher credit score, and so their lower score now joins yours and will bring yours down.

Also, if they’re paying off college loans, car loans, etc, once you’re married, their debt becomes yours!!

So gather all your financial information, sit down together, and show and tell.  Talk, talk, talk.  Promises of ‘I’m going to do better’, isn’t good enough….. They’ll have to do it….. for a specific length of time.  This isn’t mean, it’s actually a gift to them, a valuable lesson on how to handle finances….   And it’s a gift to you too… you won’t be dragged down into their debt hole with just two words….(‘I do’).

The ‘I do’ also means I do know that what’s yours is mine and vice versa including their debt.

Start showing and talking!

Your Financial Reputation

How Do You Score?

Just like in life, you also have a reputation with how you handle your finances. You actually get scored on how well you do.  Your goal is to keep it in the ‘excellent’ category….. 750 or better.

Everyone has bills….. rent/mortgage, utilities, loan payments, credit card purchases etc.  How well you do at paying them, whether you pay when/before due, or if you’re late (and how often), and if you pay in full or just the minimum.  And, it shows how much outstanding debt you have and how you’re taking care of paying it off.

All this is reported and goes on a ‘Report Card’ of sorts…. called….. Your Credit Score.  You score anywhere between 250 – 850.

Obviously, the higher your score, the better.  And your score can determine whether or if…. you can get a job, an apartment, a loan etc.  And it’s legal for prospective employers, landlords, lenders etc to check to see where you stand.  So…..

Get in the habit of living within a budget, of not buying what you don’t need.  And when you do buy something, know that when the bill comes in, you have the money set aside to pay for the whole amount before the due date.  Doing this assures you that you will have no late fee or finance charge on the outstanding portion.  And…… it keeps your Credit Score in excellent standing.

This is why a budget is imperative.  Checking on what income is received, and how you disperse it should become a habit.  Doing so will not only let you know where your hard earned money goes, but it will allow you to know what you’re saving, and for what purpose.  And, it will relieve stress at wondering and guessing.

Once you’re in the habit of doing this, you become disciplined at it…. It becomes second nature.

So, get started!

 

Every Penny Counts… It’s Common Cents

Getting Started….

Organization in all aspects of life is less stressful, so once a realistic budget is settled, and you’re moving along smoothly with it, set up two accounts: One for Emergency Savings, and one for 6-12 Month Income Reserve.

Each is as important as the other, and so, should be added to consistently until your goal for each is reached.

The Emergency one is for just that.  Should an emergency arise (and they do), you should have a $1,000 – $3,000. account set aside so you can pay the bill for the emergency when it comes due…. dental, new tires, plumbing catastrophe etc.

The 6-12 Month Income Reserve is an account which will get you through 6-12 months should you find yourself without an income…. this, too, does happen.  Whether it be a medical emergency, one that you find yourself out of work for a while, or if you are a caretaker to a family member for a while. And since we have all seen what a pandemic can do to job loss, you will have money set aside to pay your monthly expenses.

These accounts are to be used for…..only…..that particular reason.

This can truly be done.  You will find yourself to be less stressed out when, should the need arise, you will be financially covered to pay for – the cost of the emergency, or – if you find yourself out of work, you can still pay for rent/mortgage, heat, light, phone, food.  You notice take out orders, entertainment of any kind or any other non-essential spending has not been mentioned.  This Income Reserve Account is for essential bills.

And remember, when you do need to use the money from these account(s), they should be replenished as soon as possible.

Life happens. Be prepared.

 

How To Budget

You Can’t Spend What You Don’t Have….

Figuring out a budget is easy…. and common sense.  Common sense because it keeps you out of debt. A spreadsheet, or paper and pencil are the tools needed to get started.

List all…every one… of your expenses. Some will be weekly while others monthly, and others still will be annually. This is probably best done in three columns, listing each in the appropriate column. Don’t forget incidentals… gifts, insurance etc.

Question…..  Is savings in your list??  Hope so…. because you should pay yourself first.

Now, add each column.  If you get paid weekly, are your weekly expenses within that figure? The same for monthly, and again for annually.  If your expenses are more, then you need to cut back and set a strict budget to get in line with your income.  Do this as soon as possible, because if you don’t, you’ll find yourself in debt. A hole you don’t want to get yourself in, because it only gets deeper and harder to climb out.

Start chopping off unnecessary expenses, and/or chipping away at things you can.  It is imperative to stay within your income, and become disciplined at it.

It is also imperative that you save something from every paycheck.  Pay yourself first.  This is an extremely important habit to get into.  Deposit it into a savings account right away, better yet, have it direct deposited.  What you don’t see, you don’t miss.

Once you’ve set a budget, stick to it.  If it means eating out less, or stopping gift giving, it is something that has to be done….. for your financial future.

Time passes quickly and although saving for the future may seem far off now, it comes quicker than you may think.  There are other savings accounts to set up too, emergency fund, and 6-12 month income reserve.  Each as important as the other, and all necessary.

So budget and stick to it. Pay yourself first. Be disciplined about it. You’ll be glad you did.

 

First Job? / Debit Card? / Credit Card?

Don’t lose/give out your personal information…

We all have personal information, and once you are old enough to know that, you are old enough to know that you shouldn’t give it to anyone, and you should keep it in a secure place.

Birth certificates, Social Security numbers, bank account numbers, credit/debit card numbers, pin numbers, and passwords are just some of how we are identified. That said, if someone gets hold of your cards/information, they can do a lot of damage….using your name to do it.

Make copies of all your important numbers etc, and put them in a safe place.

Should you lose/misplace your card(s), notify the bank or institution letting them know.  They can put a ‘Stop’ on your account, and replace your card with a new one, with a new number.  If for instance it was a debit card, they’ll send a new card and transfer the money in your account from the lost/stolen card onto your new card.

You should also look around thoroughly and if you were out and about, retrace your steps.  Ask at the places you were if anyone turned it in.  Also, go to the police station and ask there.  There are some honest people in the world.

First job?  You’ll get a pay stub with each paycheck showing you how your earnings were shared with taxes and FICA payments and what is left for you.

Remember to save something from each and every paycheck.  Start right away and continue.  It’s an easy habit to get in to and you won’t miss what you don’t have.