How to Save Money on Your Next Auto Loan

February 28, 2017

My first car was what we call in the south a “hooptie.” I paid about $1,500 dollars for it. The car was a multiple array of rust-created colors and the air conditioning did not work, which was a joy during the hot southern summer. As a new car owner, there were a lot of car rules I ignored, such as regular car maintenance. As a result, I soon found myself on the side of a road with a locked engine due to no oil.

This made me rethink my ideas on car maintenance, but it also put me in a position where I needed a new car. With no experience or common sense, I walked into a nearby dealer, told him the payment that made the most sense to me and trusted him to find the car that matched my payment. To his credit, he stuck to my budget and helped me find a halfway decent car. The payments were in my budget and I was happy so I drove off and did not think anything of it.

Recently, I found the auto loan paperwork from that car and almost choked when I read the document. Had I known what to look for and asked when I was getting the auto loan, I could had saved myself thousands of dollars. If you are shopping for an auto loan consider doing the following.

1. Establish rules around how much of a car you can actually afford. Although I considered the payment, I did not take the actual cost of repairs under consideration.  A great rule of thumb to use when budgeting for a car is the 20/4/10. This rules involves putting at least 20% down towards a car loan, financing a vehicle for no more than 4 years and keeping your total monthly vehicle expenses to less than 10% of your gross monthly income. (Monthly expenses includes insurance and gas.)

2. Pull up your credit report using websites like Annual Credit Report.com or use websites like Credit Karma or CreditSesame.com to gauge your credit score. The last thing you need is a surprise on your credit report as you talk to your potential auto lender.

3. Research your auto loan options through banks, credit unions and non-bank auto finance companies to find the best option for you. Consider getting pre-approval and using the CFPB’s Auto Loan Shopping Worksheet to compare your loans. Going into a dealership with a pre-approved loan gives you bargaining power.

4. Understand what’s in your auto loan contract. Find out if there is a pre-payment penalty if you pay off your loan early. Fees such as processing fees, dealer preparation fees and delivery charges may be negotiable. Even your interest rate may be negotiable. It never hurts to ask.

As you shop for a loan, consider printing the CPFB’s Auto Loan Shopping Worksheet and using it as a guide to shopping for loans. Also, read your contract carefully and constantly ask for discounts. Doing these few things can help you save potentially thousands on your auto loan.

The Fastest Way To Pay Off Credit Card Debt

December 07, 2016

Is one of your financial goals getting out of credit card debt so that you can start directing that money toward something more fun like a new home, college education or retirement? Throwing away money on credit card interest is an incredible waste. The best way to avoid this, besides staying out of debt in the first place, is to work to lower your interest rates as much as possible while paying off your debt as quickly as possible. Here’s how I dug myself out of $8,000 worth of credit card debt after college:

  1. I listed all of my accounts in order of interest rates, starting with the highest.
  2. I started paying the minimum on all cards except for the one with the highest rate. I paid as much as I could afford on that account, initially starting out with a fixed $200 per month payment.
  3. When I received an offer to open a new card with a 0% promotional interest rate on balance transfers, I applied and received a card with a $2,000 credit limit.
  4. I transferred $2,000 from the highest rate card to the new card but kept paying the highest amount on the original card.
  5. Once that card was paid off, I added $200 to the amount I was paying on the card with the next highest interest rate.
  6. I marked my calendar for when the 0% promo rate was to expire and a month before, I opened a new 0% card and transferred the balance over.
  7. I continued to pay down my other cards that charged interest with gusto.
  8. Anytime I came across extra money such as a tax refund or a signing bonus for a new job, I sent the money straight toward my highest interest rate credit card.
  9. Eventually, I was just left with the balance on the 0% card. I continued to pay it down aggressively, and when the promo rate expired, I continued to open new accounts at promo rates to transfer the balance.
  10. Within about five years, I was debt free.

Now, there are a few things to consider here. First, every time I applied for and opened a new account, my credit score took a hit. This only worked for me because I had excellent credit, which I maintained through on-time payments for all my debt, including my student loans, car payment and even utilities.

Second, each balance transfer incurred a fee that was typically a percentage of the balance I was transferring. I had to make sure the interest I was saving by transferring the balance was more than I paid in a balance transfer fee. Finally, I had to actually stop using credit cards in order for this to work. Once I was out of the debt, I did go back to using credit cards, but I kept a close eye on the balance so that I was able to pay it off each month.

If your credit isn’t great, you may not qualify for low promotional rate cards. If that’s the case, then consider calling up your credit card companies and request that they lower your rate. You may even suggest that if they lower your rate, you’ll transfer other balances onto that card. Remind them of your on-time payment history and threaten to transfer your balance away if they don’t work with you.

The key to success here is never wavering on that large payment amount. Being strategic about how you pay off your cards can also trim months or even years off your debt. Use this Debt Blaster to calculate the difference it will make.

 

 

Are You Ready to Buy A Home?

November 03, 2016

With all the speculation about interest rates possibly moving up soon, I’ve been hearing a lot of talk from people about buying a home. You may want to buy, but are you ready? The answer involves a lot more than what interest rates are expected to do. Here are some questions to ask yourself:

How’s your credit? If you’re planning to get a mortgage, one of the first things the mortgage company will do is run a credit check. To get the best rates, you typically need a score of 740 or above. If yours is lower, you’ll pay higher rates or you may not even qualify for a mortgage at all.

One of the quickest ways to improve your credit is to order a copy of each of your 3 credit reports from annualcreditreport.com (free every 12 months) and dispute any errors you may find that could be hurting your score. Another is to pay down credit card or other consumer debt, which also improves your debt/income ratio. If neither of these can improve your score in time, you may just have to build a positive record of on-time payments and wait for your score to rise over time.

Do you have enough savings for a down payment and closing costs? Ideally, you would have enough savings to put down 20% to avoid paying PMI, although mortgages with lower down payment requirements are available. You’ll also likely need another 2-5% of the purchase price for closing costs plus whatever you plan to spend on furniture, renovations, etc. This should be in addition to your emergency fund, which will be even more important with your home on the line.

Can you afford the higher payments? Contact a mortgage broker or loan officer to get a quote and see what your monthly payments would be with different purchase prices. Don’t forget to include estimated costs for insurance, taxes, utilities, and maintenance/repairs. Then see how this would fit into your current spending. It’s important to do this analysis before you even start looking at homes so you don’t fall in love with one and then talk yourself into being able to afford it.

Would buying be cheaper than renting? The rule of thumb is that you need to keep a home at least 3-5 years to make it worth the transaction costs and the risks of the home falling in value. You can do a more precision calculation with this Rent v Buy calculator from the New York Times that factors in everything from how long you plan to keep the home to the tax benefits of home ownership to the opportunity cost of not being able to invest the money you spend on the down payment. If you have a really good deal on rent, or home prices are particularly expensive, or you just don’t plan to stay put for long enough, renting may actually be more financially beneficial.

Are you ready emotionally? The numbers may make sense but they won’t matter if you don’t actually feel comfortable buying. Being a homeowner means freedom from a landlord but it also means being tied down to a home that you’re responsible for. No financial calculation can tell you if you’re ready for that.

 

Want more info on this or other financial topics? If you have a question you’d like answered on this blog, feel free to email me. You can also receive my future posts by following me on Twitter and/or subscribing to my posts on the blog home page.

 

 

What is APR and Why Should You Care?

September 21, 2016

Ever wondered what promotional ads for loans mean when they talk about APR and more importantly, why you should care? Well, you should care and the answer comes from Teig Stanley, one of my brilliant CFP® colleagues who has perhaps the most diverse career experience on our team. He started his career as a child actor, has lived all over the world, and most relevant to this post, he was involved in the mortgage industry before we were lucky enough to hire him to the Financial Finesse Planner Team. Here’s what he has to say:

First of all, APR stands for “annual percentage rate.” It is the actual annual cost of any loan, including mortgages, car loans and even credit cards, expressed as a percentage of the total loan amount, including interest AND fees. It must be disclosed in nearly all consumer credit transactions according to Consumer Finance Protection Bureau regulations.

For example: If you took out a five-year $1,000 loan with no interest or fees, you’d simply divide the total loan amount by five years to arrive at a payment of $200 a year. Since there is no interest or fees, the APR is 0%. Let’s imagine that the loan has a simple interest rate of 5% but no fees. Each year, you would pay $200 (principle) plus 5% of the loan balance ($50 the first year, $40 the second year, $30 the third, etc.) That 5% is a cost for you, so in this case, the APR would be 5%.

Now let’s say there was a one-time $100 fee for the loan (sometimes called an origination fee). That would make the APR 7% – higher than the interest rate because it is taking the total cost into account. Finally, imagine that the interest is compounded. In the first year, you not only owe $200 in principle, $100 in fees, and $50 in interest, but you also owe 5% on the $50 in interest that has accrued during the year (an additional $2.50). While this amount is small, it does add to the APR, making it 7.0024%.

Confused? Don’t worry. Any bank that is offering a loan must disclose the APR so they already do this math for you.

But it’s important to pay attention to the APR because if you are expecting a simple interest loan (no fees or compound interest), you can actually confirm that by checking the APR. It should match the interest rate. If it doesn’t, that’s a red flag that something is wrong. In most cases, the APR for a loan is going to be higher than the interest rate because of fees and compound interest.

So one way to compare two loans with the same interest rate would be to compare the APR on those loans. A higher APR for one indicates that the fees or compounding would cost you more over time. It’s quite common for lenders to advertise super-low interest rates to get you hooked, only to have you discover that that they will make up for the lower interest rate with fees. Checking the APR allows you to spot these tactics and avoid paying more than you would with a higher rate but no fees.

If you have other pressing questions that we can answer on the blog, send me an email, and I’ll do my best to help. Did you know you can sign up to receive my blog posts every week, delivered straight to your inbox? Just head over to our blog main page, enter your email address and select which topics or bloggers’ posts you’d like to receive. Obviously, I suggest at least “Posts from Kelley.” Thanks for reading!

 

How to Be Better With Money

September 16, 2016

The NFL season is underway, and I’ve seen more purple in Baltimore recently than I have in months. Everywhere I go, I’m seeing enthusiastic fans getting ready for the upcoming season. Before the first game of the season, fans of every team believe that THIS is the year that their team is going to win the Super Bowl. 31 of 32 fan bases will ultimately be disappointed. But at this time of year, hope springs eternal everywhere (except maybe Cleveland!)

I see the same “Let’s Get Started” level of enthusiasm from people who tell me that they have been a bit of a mess financially in the past but are ready to make progress now. I’ve heard countless people say “I’m bad with money” or “I have no clue what I’m doing financially.” I refuse to believe that they can’t, in a few quick and easy steps, develop lifelong habits that will take them to a place of financial security. I refuse to allow them to speak poorly of their financial habits.

I ask if they have ever played an instrument or a sport or any type of art. Almost everyone has tried something like that at some point in their life. I ask them to go back to their very first day of playing the clarinet or saxophone or whatever it is, and they laugh at just how terrible they were on that first day.

After I get them to talk about how they went from horrific to actually having a clue about what they’re doing, they understand that managing money is merely a skill that they haven’t practiced yet, and today is day 1 of their new talent coming to the surface. At that point, there is an enthusiasm that tells me they are ready. When I see and hear that level of enthusiasm, I know that they are serious about making progress.

The secret to building a foundation of financial success is keeping things simple and automating as much of it as possible. With automation, simplicity and just a little bit of work, managing your personal finances is rather easy.  Here are some steps to take:

Step 1: Get some basic facts together so that you have a starting point. 

  • This financial organizer will help you see the aerial overview of your financial life on one page.  What do you own vs. what do you owe?
  • This expense tracker can help you see how much money comes in during the month and how much goes out. With these two worksheets, you have a lot of useful data, and if you update these quarterly, you will start to see progress.

Step 2: Automate things.  

  • Contribute to your 401(k) at an amount at least up to the company match. Then, enroll in the rate escalator feature to increase your contribution by 1% annually – either on 1/1 or on your anniversary or your birthday. Just pick a day and enroll in it.
  • Open a savings account at a credit union or online bank, one that is NOT where your checking account is and get a direct deposit going there. The amount isn’t important. A $5, $10, or $20/pay deposit will suffice. It’s the momentum that’s important and the speed bump! When you have your savings account at the same bank as your checking account, it’s way too easy to log in and slide money from one account to the other.
  • A great tool for “accidental savings” is the Acorns phone app. It rounds your transactions up to the next dollar (so if pay $1.86 for a coffee, it adds $.14 and slides it over to Acorns, where you can invest in a very conservative portfolio). I “accidentally saved” a couple thousand dollars that were used as a part of my down payment on the house I just bought.

Step 3:  Stay alert and updated.

  • For your credit score, CreditKarma.com and CreditSesame.com are great free tools to stay on top of any changes in your credit file.
  • AnnualCreditReport.com allows you to get a copy of your credit reports at no cost once/year. Make sure that everything there is actually yours!
  • Mint.com can show you on a daily basis all of the transactions in all of your accounts from the prior day. (I launch that app from my phone every morning while I’m still half asleep and before I hop out of bed.) This is a great way to make sure that no one is accessing your accounts without your knowledge.
  • The financial organizer and expense tracker above are excellent tracking tools. Keep a binder full of reports that you can look back on in the future to see where you started and where you are. You’ll be shocked at the progress, and when you see it, you’ll want more of it.

For anyone who has ever said “I’m lousy with money,” I say “You are no longer allowed to say that! EVER!!!” Your new phrase is “I’m always learning to be better with my money.”   With that new phrase and these tools, you can transform your financial life in relatively short order.

How To Improve and Protect Your Credit

September 08, 2016

One common question I get on our financial helpline is how to increase your credit score. After all, your credit report can impact the interest rates you pay on loans (or whether you can even get a loan at all), your insurance premiums, and even your ability to get a new job. Whether you’re just starting to build a credit history or are rebuilding one, here are some things you can do:

Make sure there are no errors on your credit report. It’s been estimated that about 70% of credit reports have errors on them. It’s bad enough to be penalized for your mistakes. You certainly don’t want to be penalized for someone else’s.

You can get a free copy of each your three credit reports (Experian, Equifax, and Transunion) at AnnualCreditReport.com. (Don’t be fooled by copycat sites that require you to supply a credit card number for the “free” credit report.) Then report any errors you may find that may be hurting your score. Some people even report any negative information since it’ll be removed if the creditor doesn’t respond in time.

Reduce your debt balances. Try not to use more than 30% of the credit available to you on your credit cards. If you’re already above that, try to pay it down.

There is one exception though. If you have an old debt, you might not want to pay it off and just let it fall off your credit report after 7 years. However, just because it’s not on your credit report, doesn’t mean you don’t owe. Unless you’re also past your state’s statute of limitations, the creditor can sue. In addition, be aware that if you make any partial payments or even acknowledge the debt, it can restart that clock for your state.

After you’ve paid off debt, you may not want to close the credit cards since that will reduce your credit available and hence the percentage of your total credit you’re using if you have any balances (even if you pay them off each month). Instead, just shred the card if you’re afraid of using it and keep the account open. If you want to keep using it but don’t like the rewards, you can also convert it to another card with the same bank.

Build a positive credit history. This is the most important step but the one that takes the longest. The main thing is to have credit and make all your payments on time. If you can’t qualify for a regular credit card, see if your bank will let you open a secured credit card that’s backed by a bank deposit. For any credit you do have, set up automatic payments to make sure you don’t miss any payments.

Set up credit monitoring. No matter how many precautions you take, things happen. For example, I once missed a medical bill because they had my address down wrong in their system. Fortunately, my credit monitoring was able to catch it, and I was able to pay it before it hurt my credit. A lot of companies charge for this, but you can get free credit monitoring from sites like Credit Karma and Credit Sesame.

Consider a security freeze. A security freeze can prevent someone from opening credit in your name. Each state has different rules, but you generally just have to pay a one-time nominal fee for each credit bureau. Just know that you’ll need to un-freeze your credit if you want to apply for new credit and then pay to re-freeze it again.

Want more info on this or other financial topics? If you have a question you’d like answered on this blog, feel free to email me  directly. You can also receive my future posts by following me on Twitter and/or subscribing to my posts on the blog home page.

Do You Know the Real Costs of Home Ownership?

August 15, 2016

How much does owning a home really cost? It’s more than you think it will. Owning a home requires more financial resources than just paying the mortgage. You must be prepared to make an ongoing investment in the care of your home. If you are thinking of buying a home or just want to plan better for the costs of keeping up your property, take this quiz to test your home ownership savvy:

1. What kind of damage does a standard homeowner’s insurance policy cover?

a) sewer back up

b) flood

c) termites

d) none of the above

Answer: d  Homeowner’s insurance is designed to cover events that are sudden and accidental, not things that could be prevented with routine maintenance, such as pest control or inspecting a sewer line for tree roots. In addition, standard homeowner’s insurance policies do not cover floods, but flood insurance may be purchased from the National Flood Insurance Program. Many homeowners find this out the hard way after a problem has already occurred.

Review your homeowner’s insurance once a year to make sure you’re covered for your risks. For an additional premium of $50-$400, you may be able to add coverage for certain perils to your standard policy. If you are considering buying in a flood region, keep in mind while flood insurance averages $700 per year, premiums can be exponentially higher if you live in a very high risk area.  Make sure you keep additional cash reserves in the amount of your homeowner’s insurance deductible as part of your emergency fund.

2. The average annual cost of a home repairs and maintenance is:

a) one half of 1 percent of the home’s value

b) 1 to 4 percent of the home’s value

c) $2500

d) $1250

Answer: b  What will you do when the furnace breaks, the roof leaks or you need to replace a washing machine? Don’t forget to look at maintenance costs before leaping into home ownership. For a $250,000 property, that means budgeting $2,500 to $10,000 for home repair and maintenance costs every year.

While it’s difficult to predict what is going to need repair or replacing during the year, count on the fact that something is going to require work. Have a brand new home with new appliances? You can probably get by for the first decade by reserving 1 percent of your home’s value in liquid savings to meet repair/maintenance expenses. Got a 150 year old house? You may find that maintenance and repair costs closer to 4 percent of the home’s value per year.

3. How much more will a mortgage cost if you have fair to good, but not excellent, credit?

a) .25 to 1.5 percent more than the rate of borrowers with high credit scores

b) .25 percent less than the rate for borrowers with high credit scores

c) the same as the rate for borrowers with high credit scores

d) people with fair credit scores will find it very hard to get a mortgage

Answer: a  The average FICO score for U.S. borrowers is good but not excellent, at 695. At current rates, a borrower with that score would pay about  four tenths of a percent more than a borrower in the highest tier of credit scores. According to this calculator for a $200,000 fixed rate 30 year term mortgage, the borrower with the average FICO score would pay $15,768 more in interest over the life of the loan given current rates – about  $44 more per month. Try this mortgage loan comparison tool to compare mortgages.

4. Maintaining the land and gardens surrounding my home is likely to require regular:

a) tree trimming and removal

b) lawn care, such as buying a lawnmower and garden tools or paying a landscaping service

c) investments in plants, bushes and other garden features

d) all of the above

Answer: d  If you have outdoor space, maintaining the lawn and garden is an important component of your home’s value. Doing all the work on the lawn and garden yourself is cost effective, but it will still cost money for equipment, plants and outdoor furniture, so make sure to include that in your annual budget. If you plan to hire help, expect to pay $40-$120 per visit for landscaping and lawn care, depending on where you live and the size of your property. Tree care is not something people can usually do on their own, so if you have large trees, make sure to budget for a tree service. The cost of trimming or removing just one large tree could be as much as $500 to $1000 because of the hazards involved.

5. When buying a home, homeowners generally spend how much on furnishing their new space:

a) $15,147

b) $3,895

c) $5,288

d) $9,733

Answer:  c   According to a National Association of Home Builders study, new home buyers spent $5,288 on furniture in the first year after buying a home built in 2004 or later. Many homebuyers fail to budget for what it will take to turn their house into a home that meets their personal aesthetic. It is unrealistic to think you won’t want to make changes. Expect that you will want to personalize your new space with paint, furniture and accessories and include those costs in your home buying budget.

Do you have questions or comments about the costs of home ownership? Email me at [email protected]. You can also follow me on Twitter @cynthiameyer_FF.

 

 

The Hidden Downsides of a 401(k) Loan

July 21, 2016

I recently had a helpline call with a woman who was thinking about taking a loan from her 401(k) to pay a $32k condo assessment and avoid the 3.75% interest rate she would be charged if she made the payments over time. At first, the 401(k) loan looked like a great option. There’s no credit check, the fees and interest rate are minimal, and best of all, the interest would go back into her own account. However, there are also several hidden downsides of 401(k) loans to be aware of:

You lose out on any earnings. The stock market has averaged a 7-10% average annualized return over time. It’s easy to overlook this but it’s probably the biggest cost.

Your payments may be higher. Even if your interest rate is lower than the alternatives, your payments might actually be much higher than a credit card that will be paid off over 20-30 years. That’s because 401(k) loans generally have to be paid back within 5 years. The payments also generally come out of your paycheck so if you run into financial trouble, you don’t have the option to prioritize things like your mortgage and car payment. You also can’t eliminate a 401(k) loan through bankruptcy.

You may not be able to take another loan. This could be a problem if you don’t have an adequate emergency fund. In that case, you might want to borrow more than you need and put the extra money away someplace safe like a savings account or money market fund for a rainy day.

You may be subject to taxes and penalties if you leave your job. Any outstanding loan balance after about 60 days of leaving employment is typically considered a withdrawal. That means it’s subject to taxes and possibly a 10% penalty if you’re under age 59 ½.

You’re double-taxed on the interest. Even though the interest wasn’t paid pre-tax, it’s taxable when you eventually withdraw it. That means you’re essentially paying taxes twice on that money since you already paid taxes on it when you first earned it.

In this woman’s case, her employer’s policies provided a lot of advantages since she was able to take out up to 5 loans at a time and could continue making loan payments after leaving her job. However, we calculated that the taxes on the interest could easily add up to over $1,000 depending on the interest rate. As a result, she decided to use some of her emergency savings and reserve the 401(k) loan option for future emergencies.

If you’re considering a 401(k) loan, be aware of all the possible downsides. Make sure you also consider other options like peer-to-peer lending sites such as Lending Club and Prosper that allow you to borrow money from other people over the Internet, usually at lower rates than you can find at a bank. Finally, don’t forget that the real purpose of your 401(k) is retirement.

Why I’m Thanking Google and the CFPB

May 20, 2016

It’s a regular part of my day to talk to people who are struggling with debt. Some people facing what they consider a crisis level of debt will occasionally make a hasty decision, one that they find helpful in the moment but later regret, and take out a short term loan.  These “payday loans” are available to borrowers with less than stellar credit scores and are readily available in nearly every community in the country, but they are often pretty terrible financial tools.  The interest rates, when looked at as an annualized rate (because rarely are they paid off in the required time, so they continually roll over into new short term loans with the interest continuing to accrue at a high rate), rank up there with the loan sharks in old gangster movies. As a result, the Consumer Financial Protection Bureau is working toward getting this payday loan industry regulated and reigned in a bit.

It was refreshing for me to read this article about Google banning payday loan ads on their search engine. The last few people I talked to who had payday loans found their payday lender online after searching for ways to get out of debt. If they used Google to search for ways to reduce/eliminate debt on a semi-frequent basis, payday lenders could show up on their computer screen and look like a way to reduce a short term pressure. Sure, it adds longer term pressure but in that moment of temporary weakness, the short term pressure release seems like a perfectly rational idea. Now, people who search for short term loans or ways to get out of debt will not see payday lenders showing up on their laptop with the promise of solving a problem (by creating a bigger one!).

I’m pleased with Google’s new approach to payday lending, and I’d love to see that industry shrink as more and more people learn more about how to manage their personal financial lives and master the basics. The “basics” as I see it are: spend less than you make, save a portion of each paycheck, build a comfortable reserve fund and avoid high interest debt. Those who do that will be able to avoid the perils associated with these loans.

For anyone considering a payday loan…DON’T! We’d be more than happy to help you consider other alternatives. Ask us a question on our Facebook page, send us a Tweet or mail us a letter with your situation and we’d be more than happy to help you find a better alternatives. The CFPB and Google are taking action on an issue that we have been helping people address for many years, and I, for one, am happy to see the progress.

 

Detox Your Finances

April 26, 2016

Every spring, I get the itch to clean. It drives my family crazy but I cannot stand clutter. If I see an item either not being used or not organized for a future purpose, I am probably throwing it away. The great part about my habit is that my family is scared to leave anything out so I rarely have to pick up behind anyone. My reasoning is that everything is either working towards a goal or working against a goal – in this case, clutter.

Finances can be looked at the same way. Either what you are doing is working towards your goals or working against your goals. This is a great time to detox your finances of anything that may be toxic to you reaching your financial goals. If you are not sure where to start, consider this as a starting point:

Did you get a big tax refund or owe Uncle Sam a check? The goal should be to break even – not give the IRS an interest–free loan or owe money. Use the IRS withholdings calculator for guidance on how much withholding to claim on your W4. This is extra money that could be used for financial goals like savings, getting out of debt or college.

Do you feel like your money goes into a black hole the second you get it? Consider detoxing your budget of expenses that are wrecking havoc with your finances. These are what I consider to be the most toxic:

Eating Out: This is like a vortex that sucks money from you. Consider bringing your lunch to work 2x a week. If you go out with friends, eat before and have a large appetizer or salad or soup

Cable: There are so many options today that make it easy to cut the cable cord. Consider streaming devices like Google Chromecast, Apple TV, Amazon Fire TV or Roku to stream TV and movies through services like Netflix, Hulu, and Sling TV so you won’t go into television deprivation.

Mobile Phone: Contact your cell phone provider about discounts on your cell phone package.  Another consideration is to use tier 2 carriers such as Cricket, Metro PCS, Boost or Straight Talk that generally work with the same cell phone towers as the bigger carriers like AT&T, Sprint, T Mobile and Verizon but at a fraction of the cost.

Are you looking to make a major purchase like a house or car? Get an annual free credit report from all three reporting agencies from websites like annualcreditreport.com. Once you get your credit reports, review them for toxic information using websites like Nolo.com. If you find errors, you can dispute them online. As you review, pay close attention to the following:

  • Review your personal information to make sure all of your information is correct – your name, Social Security number, marital status, etc.
  • Review the your account history to make sure that it is accurate.

Don’t just do spring cleaning. Take the time to detox your finances as well. It can help rejuvenate your New Year’s resolutions and help ensure that all of your finances are working towards your goals.

 

Finding Some Good In My Worst Financial Decisions

October 26, 2015

Have you ever made some really dumb mistakes with your money? Perhaps your rational brain was screaming “No!” at the time but your emotional brain won the battle.Well, even though I may be a professional financial planner tasked with leading others to smart financial decision-making, I’ve had some major money missteps along this journey called life too. This week is the first in a series of blog posts about a few of my biggest blunders and how I tried to turn those mistakes into some good old fashioned life lessons. (Unfortunately, some life lessons can be quite expensive.) Continue reading “Finding Some Good In My Worst Financial Decisions”

How Your Finances Can Affect Your Dating Life

August 14, 2015

One of my favorite phrases with my friends after I say something that clearly isn’t all that brilliant is “Is there any wonder I’m still single?” Sometimes, I say things that are meant one way but interpreted another.   At dinner the other night with a group of friends, I made a comment about needing to go outside for a potty break. Of course, I meant the dog but the way I said it made a few of the guests a wee bit nervous. Fortunately, my date understood what I meant and got a good laugh out of it. Continue reading “How Your Finances Can Affect Your Dating Life”

Money For Grown Ups

July 10, 2015

In a conversation with another financial planner here at Financial Finesse, the subject of having college–age children elicited laughter as well as groans. Cynthia Meyer and I shared some stories about our past “adventures” in finance and some mistakes we made along the way. She was inspired enough to write this blog post: Continue reading “Money For Grown Ups”

Will You Be A “Boomerang Buyer”?

April 08, 2015

Since 2008, over 14 million homes have been lost to foreclosure. It may have been caused by a job loss, illness, or other heavy financial burden, but whatever the cause, losing a home can feel like a financial defeat….NOT SO! In 2014, roughly 10% of home purchases will be made by homeowners who lost their home to foreclosure or short sale between 2007 and 2013. These new homeowners, affectionately called “boomerang buyers,” did not give up on their desire to own a home and you shouldn’t either. Here are some steps you can take following a home loss to get back in a home of your own: Continue reading “Will You Be A “Boomerang Buyer”?”

The Price of Inattenton

January 02, 2015

As we look back at the previous year, I have started thinking about people I’ve talked to this year who have left an impression on me. One of the more memorable people that I was able to have conversations with started with a story that was disturbing on a few levels, but has come to a relatively happy conclusion. The fun part for me was getting updates on her progress and seeing the change in her voice, posture and energy level as things got better.  Continue reading “The Price of Inattenton”

When is Borrowing From Your 401(k) a Good Idea?

June 20, 2014

If you ask most financial planners when is the best time to borrow money from your 401(k), the overwhelming answer will be “NEVER”! And, for the most part, I agree with that. But, like almost every rule, there are exceptions.  Continue reading “When is Borrowing From Your 401(k) a Good Idea?”

When the Wedding Bells Stop Ringing

June 18, 2014

For centuries, June has been the most popular month for weddings.  The idea of two people vowing to share the rest of their lives together always puts a smile on my face, but are these two souls that have now been joined as one fully prepared for what lies ahead?  I should think that a person that says “I do” does so with no thought of some day thinking “I don’t,” but the reality is that many of these newlyweds won’t be together in 20 years. Continue reading “When the Wedding Bells Stop Ringing”

Is Your Financial Life a Thriller?

June 13, 2014

I have heard a lot of people say jokingly that they wish they had the financial resources of a random famous person. Take Michael Jackson. Houses, cars, amusement parks in his backyard, animals galore…he seemingly had it all from a financial wherewithal standpoint.  Continue reading “Is Your Financial Life a Thriller?”

Going Against the Odds

May 30, 2014

I’ve played one sport or another virtually my entire life. And, along with playing, I enjoy watching as well. One of the many things I love about sports is that it is just so unpredictable.   Continue reading “Going Against the Odds”