Category Archives: Tips & Tricks

Read this before shredding paperwork

What to toss / What to keep.

We all like to get rid of excess paperwork. But…. before you do read this….

Always keep: 7 years of tax records — both State and Federal, keep all W2’s from your employment history (one for each year, but if you worked 2 or 3 jobs in any given year, keep those 2 or 3 as well.) —- These are proof that you worked and contributed to the Social Security Trust Fund and will be your proof should there be a discrepancy when you apply for Social Security.

Keep…. Originals of Birth Certificates, Adoption Records, Name Change records, Marriage Certificates, Divorce court records, Divorce NiISI, Social Security Card, Health Insurance card, Medicare card,

Keep….. Car records, Purchase slip, payments records (when car is paid in full, keep first and last payment stubs. Keep the Title (you can’t sell the car without it). It’s also a good idea to keep any payments made for work done on the car, such as the upkeep of oil changes, and any parts that were needed and replaced.  This shows a record of good upkeep of the vehicle.

Keep….. Mortgage records…. payment statements, and keep (don’t burn). that final payment statement … people did this years ago, they’d ‘burn the mortgage’. !!!!   Keep it…. it’s called the mortgage discharge.

Keep…… the W2 statement from each year you worked.  Also the final pay stub from each job you worked in each year you worked.  This shows proof when you apply for Social Security.  They will have a record, but sometimes there is a discrepancy, and having these slips shows proof of your employment.

Keep….. any Retirement Funds records, and the final bank statement from the current year.

These should all be kept in a safe place.

 

Turning 18???

You are now ‘Legal’ …..

Turning 18 is an exciting time for most…… You have graduated or will soon graduate from high school and for those who will be starting college there will be (or have been) tours of college campuses and choices to make.

You may have received one or more scholarships to help defray the cost of your college education. Or, the cost may be yours to pay.  At 18 you are now responsible for your own debts.

Signing on the dotted line means the debt is yours to pay…. so getting a loan at the lowest interest rate possible is a must.  There will be specifics….. length of loan as well as monthly payments and due dates…. It is imperative that you adhere to the payment schedule so you won’t fall behind and then have more debt in the form of added interest charges and late fees.

Those who opt to forgo college and join the work force should begin a budget to take care of any expenses.  Do not….. i repeat….. do not buy what you can’t afford to pay when the bill comes in.  Doing this will get you into a financial hole which can take years to crawl out of.

Which ever path you choose, choose wisely.  And begin right away to pay your debts on time and in full so you will never incur added debt.

 

Saving For A Home?

The bigger the down payment the smaller the mortgage payment….

The idea is to put at least 20% of the cost of the home on the table as your down payment.  The reason for this is that anything below that 20% means you’ll need to pay “Mortgage Insurance” to the lender until you meet that 20% figure.  The reason for this is so that should you default on your payments, the lender can recoup at least a portion back.

So…… Put down at least 20%….. more is better because the more you can put as your down payment, the lower your monthly mortgage cost per month (for the length of the loan).  So this is clearly better.

Remember, once your mortgage figures are set…. principal and interest….. those figures will not rise (or lower) as time moves forward.  Your real estate taxes and insurance may fluctuate a bit each year (these figures aren’t set by the lender).  The whole payment is PITI …. principal, interest, taxes, insurance…… and mortgage insurance if your down payment was below 20%.

Once your loan is established, you can always put extra money towards your principal only. This will not only pay your loan off quicker, but it will save money in interest payments as well.  So this is a very good idea.

You can also pay bi-weekly (every 14 days), which is free to do (just a phone call to your lender to set it up, and it will save at least 2 1/2 years off the length of your loan, but also save you thousands of dollars in interest payments…… a no brainer!  The extra full payment each year goes in it’s entirety towards your principal payment…. this includes the TI (taxes and insurance) part of your payment.

Any time you’re paying extra towards your principal, always tell the lender to put the payment towards “Principal Only”.

 

A Cash Windfall For You??

How would you handle a cash windfall?

First, do not….. I repeat…… do not let it fall through your fingers!  You will regret being foolish.

So that you know where you are with paying down your debts, put the windfall into a new checking account.  Doing so will allow you to see at a glance your payments towards those debts and also how well you’re doing at getting them all down to zero.

Make a list of all your debts….. every one of them…… then put them in order of amounts with the smallest amount first, largest last.

Next check the interest rate you’re paying for each, and put those in a second list with the highest rate first.

Pay the smallest debts first to get them completely off the list(s).  And don’t use that institution again.

Now, call the other institutions to see if you can lower the interest rate on your account and ask if they’ll work with you to pay it off quickly.  Also ask if there is any pre-payment fee…. most will say no, but it’s best to ask.  There is no need to mention to them that you’re working with other debts.

Have them direct withdraw the money from the new checking account….or you can write a check (but be disciplined each month and don’t be late with the payment).

Once your debts are paid off, and your debt free, put what is left in savings and continue adding to that savings on a regular basis.

Remember, ALWAYS pay yourself first!!

 

Prioritize Your Bills

First things first!!!

It’s very important to prioritize when paying your bills.  If you don’t, it is not only foolish, but costly in so many ways.

The first thing to do is write down what your total income is….. then make a list of your expenses….. all….of….them!  Now, put that list in order or importance…..

Rent/mortgage, food, utilities, medical, car payments, insurance(s), etc.  The order is important because you need a roof over your head, you need food, and warmth and light. You need to stay healthy, and have transportation to/from work. You need car/life insurance.

Most anything beyond that can be either cut down or eliminated completely.

But……. out of the amount of money that is remaining, the first thing is to SAVE!!! SAVE!!! SAVE!!!

Set aside savings first, then if any ‘fill ins’ are needed, they come last.

If you neglect this method of budgeting, you will find that you will be overspending, on things you do not need, things that you can live without.

Learn to be frugal……. you won’t be sorry.  Do this for your family, for yourself.

 

 

Planning On Tying The Knot?

Make sure you’re both on the same financial page….

Since finances are always a bone of contention at some point during a marriage, before you tie the knot is when you should seriously discuss finances to make sure you’re both on the same page.

If one is a spender and the other a saver, it is a bad idea to move forward with plans until you each put all your debts, accounts, and how you handle them out in the open.  Don’t hold anything back…. no secrets…. or you will be found out sometime down the road.  Better to tell all now, and if you spend /or save differently, budget differently, pay bills differently, now is the time to bare all.

You both need to be on the same page with finances.  If one has no debt and the other has a lot (or staggering debt), now is the time to find out and hold off on the big day until, and if, the debt is paid off.

After all, once you say ‘I do”, their debt automatically becomes yours!  And, would of course, bring down your credit score.

Also, if one can handle money and budgets better than the other, then that one can oversee bill paying, but the other should always be included so that he/she will also know where the money goes (and hopefully learn how to handle money and bill paying properly.

The idea is to know about the other persons finances before any wedding day plans are made.

 

 

Staying Out of Debt

Living within your income is a must!

Back in the day there were no credit cards, no debit cards, just cash.  That meant that if you didn’t have the cash to buy something, you walked out of the store without the item.  Easy.

Then along came credit cards.  If you learned how to use them properly right from the start, they could be an asset to you.

But……

If you used them the wrong way…… that is, buying an item then paying for it over several months….. that’s the wrong way…… because it cost you not only for the item, but for the finance charges as well, and, if you were late with the payment(s), there were also late fees.

All substantial costly charges to you. So, in fact, you might pay two, three or more times the cost of the item you ‘wanted’.

Using a credit card in this manner will get you into a financial hole you could take years to get out of, all the while paying staggering financial fees to do so.

This method of paying is not the way to use a credit card.Use your credit card….only…..if you know you have the money to pay for the item(s) ready and waiting when the bill comes in.

This is the ONLY way to use a credit card!

The How To’s of Budgeting

If you don’t have the money to pay for it, don’t buy it!

Make a list of things you do need….. rent/mortgage, utilities, food, medical insurance, car payments etc.  Notice that the list doesn’t include incidentals….. eating out, entertainment, gift giving etc

Using the figures needed for each item listed, add the figures….. does your income allow for payment of these essentials?

With the remaining figure, save half…. start or add to an ’emergency fund’, or a 6-9 month ‘loss of income account, or a retirement account.  These are essential so that should you need new tires, or a dentist visit, or a plumbing emergency, the money is there to cover it.

The 6-9 month loss of income account is just that….. should you lose your job, or be out of work for a time, the money is set aside for the necessities, (rent, utilities, etc)…. not…. eating out, or entertainment.  Just. The. Necessities.

Being able to stay within your budget…… (No debt)…… is your goal…

It takes discipline, but it can be done.

Get started.

Paying a Mortgage Early

Shave Time and Interest Costs

The majority of those with a mortgage will have a 30 year fixed.  There should be no pre-pay penalties.  So….

The earlier the better to begin making bi-weekly payments, the better.  Over the length of the loan it will shave at least 2 1/2 years off the maturity date as well as thousands of dollars in interest costs.  It’s free!  A no brainer!  Just call your lender to start.

Before you make the call, make sure you have at least an extra months’ payment in the account.  And when you deposit the payment amount into the account, round up (as much as you can)….. this insures that when the 2 extra 1/2 payments is due (twice a year, usually Spring and Fall), the money is there when the lender withdraws the 1/2 payment.

With a regular 30 year mortgage, 12 payments per year are made on a set date each month. But a bi-weekly schedule means that there will be 26 payments per year…. every 14 days.

Two payments for each month to equal the 12 usual payments, and 2 more (Spring and Fall) will be withdrawn in 1/2 payment and 1/2 payment each to equal 13 payments for the year.

This added full payment goes DIRECTLY to reducing your PRINCIPAL.  So, if your mortgage payment is $1,500. per month, that 13th payment (1/2 and 1/2) will cut $1,500. per year off your principal (or $45,000) off your loan total as well as the interest for it.

Just be disciplined…… make sure you have the money in the account to cover it.  Just a phone call…….  It’s free to do.

And remember, any time you’re able to put any additional amount towards your principal, do so….. this too saves you interest and shortens your loan maturity date…. even $50. here and there helps.

It’s common sense!

 

New Year = Readjust Your Budget

Remember….. PAY YOURSELF FIRST !!

Paying yourself first is a must….. it means you think enough of yourself to save for your future.

If you think that Social Security will be there for you…..think again…..  as it stands now, by 2034 those receiving Social Security will have their benefit lowered by approximately 25%.  And with so many people not working (and not putting into the Social Security System, that figure is sure to be more than a 25% cut or happen much sooner than 2034….. it’s common sense.

That said, it’s imperative you pay yourself first.

And, you need to get rid of your outstanding debt.  Pay it all off so that you are debt free with only the monthly bills to pay.  Doing this means you’re not paying any finance charges, thus saving money there…… a no brainer.

Being debt free is a great feeling…… it leaves you financially stress free.

Buying only what you know you can pay for – in full – when the bill comes due is the only way to handle purchases.  So, if you can’t pay for it, don’t buy it.

You may need to squander a bit until you get it all paid off, but in the end, you’ll be so much happier.