Personal Finance Tool Review: CreditKarma

February 17, 2014

Do we place too much emphasis on credit scores in America? Probably, but most of us aren’t completely debt-free. I’ve mentioned before that credit scores are not the “be all and end all” of your financial situation – but your credit score can help you lower the cost of borrowing money.  A higher credit score could save you thousands of dollars if you are in the market for a new home or refinancing because scores over 760 typically help you qualify for more competitive interest rates for a mortgage.  It is also important to note that routinely checking your credit report can help identify potential risks related to identify theft. It can even be difficult to obtain a job in some careers without a good credit report. Continue reading “Personal Finance Tool Review: CreditKarma”

11 Ways To Boost Your Credit Score

January 27, 2014

One of two things hold you back from better credit — inaction or the wrong action. So it’s either time to start doing or to start doing it right. Here are 11 ways to do that: Continue reading “11 Ways To Boost Your Credit Score”

How to Educate Your Kids on Proper Money Management

January 19, 2014

When it comes to money, kids today are presented with a world of choices that most of us parents didn’t have to worry about when we were young. You certainly didn’t have to think about the latest iPod or iPad, $100 tennis shoes, or any other purchases of that magnitude. Depending on your age, credit and debit cards may not even have been around when you were younger – if you grew up when I did, you either had money or you didn’t. Continue reading “How to Educate Your Kids on Proper Money Management”

7 Steps For Millennials to Define Their Financial Future

January 16, 2014

Over the last two days, we discussed the Baby Boomers and the Generation Xers. Finally, let’s take a look at the newest generation to enter the workforce: the Millennials.  Like the other age groups, not saving enough for retirement is the biggest vulnerability facing Millennials. However, they’re the only generation that doesn’t seem to know it as Millennials ranked more urgent needs like managing cash flow, getting out of debt, and investing as higher priorities. Here are some steps Millennials can take to strike a better balance between the needs of today and tomorrow: Continue reading “7 Steps For Millennials to Define Their Financial Future”

Are 401(k) Loans a Really Bad Idea?

June 10, 2013

Following a recent financial planning webinar presentation, I was faced with a frequently asked question.  Does it make sense to take out a 401(k) loan to consolidate debt? This employee had definitely done her research on 401(k) loans but she was wary after reading warnings from many financial planners and media gurus. However, this didn’t deter her from exploring a 401(k) loan as she was eager to eliminate her high interest credit cards and get them out of her life forever.  Continue reading “Are 401(k) Loans a Really Bad Idea?”

Is Your Credit Score Hurting Your Job Prospects?

May 17, 2013

One of my friends sent me this article about credit scores impacting a job search to ask my opinion. And, he confided in me that this is probably a part of the reason that his wife has been unable to find work for nearly two years and has just about given up on her quest to find another job. This is a very troubling trend in the workplace and all too often good people are being denied the opportunity to work in this dreadful economy that just hasn’t produced robust job growth.     Continue reading “Is Your Credit Score Hurting Your Job Prospects?”

Is Your Financial Plan on Track?

April 15, 2013

Are you making progress in your financial life or are you simply trying to keep the train on the tracks when it comes to managing your personal finances? We track the financial well-being of employees in the workplace on a quarterly basis and it is obvious that not everyone out there feels that their financial life is on track. In our 2012 Year in Review research report, retirement preparedness remains a significant concern with only 17% of employees knowing their on target to reach their retirement income goals. Financial stress also remains a potential problem with 82% of the employees participating in the workplace Financial Wellness Assessment reporting some degree of financial stress.  Continue reading “Is Your Financial Plan on Track?”

Financial Advice for an 18-Year Old

February 14, 2013

There’s a lot of financial information out there for people at various stages in life. But what about for those just starting out in adulthood? How can they get off on the right financial foot? Continue reading “Financial Advice for an 18-Year Old”

Which of Your Actions Fail the “Piggy Bank Test?”

January 25, 2013
The other day I was looking through some boxes that I hadn’t opened in a few years and I found an old piggy bank that I had from very long ago.  I opened it and there was about $30, all in dimes, inside the piggy bank.  I vaguely recall being a fan of dimes a long time ago.  They are our smallest coins and “pound for pound” give the highest value /size ratio in the world of U.S. coins.  I started to think about the logic behind piggy banks and a few things hit me. Continue reading “Which of Your Actions Fail the “Piggy Bank Test?””

Credit Score Myths That Drive Me Crazy

January 18, 2013

When I meet with people who are dealing with building credit for the first time or rebuilding/repairing their credit after some financial misadventures, we often talk about the components of their credit score and how they can make an impact on that score.  Fairly often, someone will say “I have heard…” and then tell me something they’ve heard about credit scores.   After hearing the same “I have heard” items or myths repeatedly, I thought it might be a great time to address a few of them so that you can start the new year with a few facts instead of myths. Continue reading “Credit Score Myths That Drive Me Crazy”

How to Make 2013 a Financially Productive Year

January 03, 2013

If you’re like most people, New Year’s resolutions are usually a source of endless disappointment. We start the year with grand ideas that often melt away before the end of winter.  One of the biggest reasons for this is the tendency to try to do too many big changes at once, which causes us to burn out and get nothing done at all. That’s because we tend to overestimate what we can accomplish in the short run and underestimate what we can accomplish in the long run. To break things down, here are some ideas for each month to improve your financial situation in 2013: Continue reading “How to Make 2013 a Financially Productive Year”

How to Qualify For a Mortgage

December 05, 2012

Susan and I purchased our first home back in 1996. Like many newlyweds, our first home is what you might call a starter home.  It was a modest, two-story, single family home on a small piece of property at the end of a cul-de-sac.  After seven years (and three kids), we were ready to move on, and so we did. Continue reading “How to Qualify For a Mortgage”

What To Know If You’re Considering Bankruptcy

August 16, 2012

In his blog post last week, Michael Smith wrote about a woman who was able to overcome tens of thousands of dollars in medical debt by giving up a variety of comforts, working a second job, and even having her friends host a local fund raiser on her behalf. When Michael last spoke to her, she was only 3 months away from paying off all the debt. This is a truly inspiring story about what can be achieved through sheer willpower and determination. Continue reading “What To Know If You’re Considering Bankruptcy”

Cosigning For a Credit Card Doesn’t Equal Love

August 01, 2012

The process of building (or rebuilding) credit can seem like a catch-22. In order to be approved for a prime credit card, you first need to have an established and respected credit history. But how do you attain that history, if they won’t approve you in the first place?! Is co-signing your only choice? Continue reading “Cosigning For a Credit Card Doesn’t Equal Love”

Proper Mortgage Planning Helps Avoid Financial Challenges Later On

April 25, 2012

Financing a property is considered to be a good investment. If you plan properly and take out a mortgage for your home, down the road, it may turn out to be a great asset for you. However, if you make a wrong decision, then it can lead you to face severe financial challenges later on. So, proper mortgage planning is very important so that you can lead a stress free life after you take out a loan. Continue reading “Proper Mortgage Planning Helps Avoid Financial Challenges Later On”

Is It Time to Refinance Your Mortgage?

March 28, 2012

The chance to refinance a home mortgage loan is rarely missed by a homeowner who is struggling to make his minimum monthly payments on time but this is not always the best option for every homeowner. Being able to refinance a loan doesn’t always give you the bragging rights in your neighborhood. Instead, you should give some thought behind the timing of your decision so that you don’t end up making the wrong decision about your rising mortgage debt level. Remember that multiple refinancings can reduce the overall financial benefit so when you decide to refinance your home loan, you should make sure you make the best decision in order to make it the final one. Don’t be a refinancing junkie as this will hurt your credit score and make you less able to get new lines of credit at an affordable rate. Continue reading “Is It Time to Refinance Your Mortgage?”

7 Steps To Financially Prepare For Your Own Business

March 22, 2012

While most of what we do at Financial Finesse centers around helping employees, we sometimes get questions on our financial Helpline from people who are interested in starting a business on the side. We recently received a question on our blog about how to start a poultry farm. While I’m certainly no expert in poultry farming (or anything remotely like farming), there are some basic financial steps you can take before you start any type of business.

Take charge of your cash flow

As important as budgeting and saving are, they will become even more important if you’re self-employed. That’s because without a steady paycheck, your income could see lots of ups and downs and probably a lot more downs than ups in the early years.

The key will be discipline, not just when times are bad but also when times are good. I remember that when I first started working on commission and had a big payday, I tended to celebrate by splurging and buying something expensive that I really wanted. When the good times were followed by the not-so-good times, I quickly learned the importance of saving that extra cash for the next rainy day. See some of my earlier posts for ideas on how to minimize your expenses, pay off any high-interest debt you may have, and…

Beef up your savings

Speaking of saving extra cash, having lots of cash will become even more important. In an earlier post, I wrote about how the size of your emergency fund should be based on how risky your income is. Well, few things are as risky as starting your own business. Not only may you need to cover personal emergencies and income shortfalls, you may need to pay for some business emergencies and other costs out-of-pocket too.  Aim for at least 1 year of expenses and ideally 3-5 years somewhere safe and accessible.

Buy health insurance

This is one personal expense that’s likely to go up when you’re self-employed. Under COBRA, you can keep your group health insurance for about 18 months after you leave your job (but generally without your employer’s subsidy so the rates are likely to be higher than what you’re used to paying) and then after that, you’re on your own.

One way to reduce your premiums is to choose a high-deductible plan, especially if you’re in good health and have enough savings to pay for that high deductible. On the other hand, an individual plan could be out of reach if you have pre-existing conditions or are in poor health. In that case, as much as you may come to dislike the President’s health care plan as a future employer, you may love it as someone who may benefit from the regulations and the subsidies that could make individual health insurance more affordable.

Get a handle on your credit

In addition to savings, you’ll probably need access to credit of some kind. The trouble is that it will be harder to get once you don’t have a regular income. If you can benefit from refinancing your mortgage, do it before you leave your company. The same goes for signing up for a home equity line of credit. You might also want to start developing positive relationships with your local bankers.

Since you won’t have much income to show, more weight will be put on your credit score. If you haven’t gotten a free copy of your credit report in the last 12 months, order one from each bureau at annualcreditreport.com and fix any errors you find. You can also use sites like creditkarma.com and quizzle.com to get a free copy of your credit score and see what other steps you can take to improve it.

Learn as much as you can about your future business

When Warren Buffett was asked why he didn’t invest in tech stocks before the dot com bubble burst, he said that it was because he didn’t understand them. This is even more true when it comes to investing in your own business. Study the industry you’re entering into as much as you can and find a mentor that you can learn from. You can also get general information on starting a business from the Small Business Administration. It’s good to learn from your mistakes but it’s even better to learn from someone else’s.

Know the rules

Even if you know everything there is to running your business, you can easily get tripped up by taxes, lawsuits, and regulations. You’ll need to decide whether to set your business  up as a sole proprietorship, partnership, LLC, or corporation. The LLC has become particularly popular as a way to shield you from both the personal liability of a sole proprietorship or partnership and the double taxation and regulatory burdens of forming a corporation.

You’ll also want to get a tax identification number from the IRS, register your business name with your state and find out about your state’s tax, worker’s compensation, unemployment, and disability insurance requirements, check local zoning laws before choosing a location, make sure you have the proper licenses and permits from all those various levels of government, and keep your personal and business finances separate.

Depending on the complexity of your situation, you may want to hire a business attorney and/or an accountant to help you with all this.

Look for ways to shelter your income from taxes

Once your business becomes profitable, you’ll want to start protecting those profits from the tax man. If you have a high deductible health insurance plan, you can contribute to a health savings account. In addition, there are a myriad of tax-sheltered retirement accounts for small business owners like SEP-IRAs, Simple plans, and Individual 401(k)s. These accounts will also help diversify your wealth away from your business.

Starting a business is exciting but as I’m sure you realize by now, these initial steps can be a lot of tedious work. After all, we’re just scratching the surface here. (We didn’t even get to talk about the chickens!) Just remember that your sacrifices today can save you from catastrophe tomorrow and eventually make your dreams come true.