Category: Financial

Learn from our financial experts who provide clear advice and tips on everything from taxes to loans and all that is in between.

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Credit Debt Financial

6 Tactics for Handling Piles of Credit Card Debt

credit card debt

If you have a significant amount of credit card debt, you are not alone. You want to figure out how to improve your situation, or you wouldn’t be here. That is the best first step to climbing out of a deep hole of credit card debt, you have to want it.

Once you want it, and you are ready to work for it and fight for it, then you need a strategy. We’ve pulled together a robust list of the 6 most effective things you can do to put a dent in your credit card debt.

1.   Buddy Up

This is something that most people do not think about. They underestimate the power of having someone for support while facing their debt problem. This can be anyone from a variety of roles in your life. Some people prefer a financial advisor, while other people are more trusting with a friend or family member. Another benefit to not going solo is it helps boost your accountability as well as your chances of reaching each goal you set.

2.   Hide The Credit Card

Stop using your credit card or cards for financial emergencies, that is likely a contributing factor to how you got into debt. Instead, build a savings reserve that you would use for emergency dental or vehicle work. This way you can catch up on your debt, and lower your credit utilization as well, which makes your credit score look better. For an emergency fund, make an initial goal of one month worth of expenses, and work your way up to a 6-month cushion.

3.   Pay High-Interest Debts First

This is another one that people overlook. After you get smaller debts out of the way, focus on your highest interest rate, and pay that down as fast as possible. Pay a much over the minimum as you can, while still staying current on your other obligations. This can save you thousands in interest alone on higher limit accounts and will reduce the time it takes you to pay it off.

4.   Ask Your Lender For A Lower APR

This is another tactic that few people think to utilize, or realize is even possible. Simply call your lenders and ask them if they can reduce your APR. Not only will this save you money every month, but it will allow you to pay debts down quicker since you won’t need to make nearly as many payments over the life of the debt.

5.   Budget Firmly

This is always one of the obvious ones, so we put it at the end, but it’s still so important that we couldn’t omit it. Budget and stick to it as much as you can. This goes for not only your spending but your debt repayment. Once you know your current bills are accounted for, figure out how much you can then use to pay off credit card debt. Your budget will be another tool of accountability, only you answer to yourself.

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Financial Savings

How Big Should Your Emergency Fund Be?

emergency fund

These days, things can seem a bit more uncertain than we’re used to. Pandemic shutdowns, market volatility, and more are causing millions of Americans to rethink their saving plans. People across the US are starting to save up an emergency fund, just in case. An emergency fund can save the day if you have one when you need it.

At most estimates, the average American should plan to have between 3 and 6 full months of living expenses at the minimum. Depending on your means and the circumstances, you may even want to sock away an entire year’s worth of money. Living expenses in our case means, all of your bills, mortgage or rent, food, discretionary spending, everything.

If this sounds like a lot of money, you’re absolutely right! That doesn’t make it impossible, but it does make it challenging. You may not need that much based on your particular situation, but we are going to help you figure it out.

The 3 To 6 Month Rule Of Thumb

Most experts say that keeping 3 to 6 months of living expenses based on your current pay is enough of an emergency fund. You might be able to get away with less than 6 months of expenses if:

  • You have minimal debt
  • Your cost of living is relatively low
  • Your rent does not fluctuate much, if at all
  • You have reliable transportation
  • Your job is stable
  • You have no kids or pets
  • You enjoy generally good health

While not all of these would have to be true, you can see how they give you an idea of the fluctuations and potential “surprise” expenses that may happen in some cases. This is often considered the best-case scenario for an emergency fund.

You may want to consider saving much closer to 6 months of expenses if:

  • You have some relatively low-interest debt
  • It would be difficult to replace your current job
  • You own a home
  • Live in a high cost of living area
  • You have children
  • You have any medical issues
  • Have dangerous or high-risk activities
  • Have no financial support outside yourself

6 To 12 Months Of Expenses

There are scenarios when you may want to have a much larger financial cushion. This is not just in case something happens to you or your source of income, but also to augment your potential retirement if you are not already retired. Consider saving up to a year’s worth of expenses if:

  • You provide solely for multiple dependents
  • You are approaching or at retirement age
  • Your job is highly specialized, a niche position, or may need you to relocate at some point
  • You are a high-income earner

Once you have decided how much you should save, be sure to set that goal and stick to it. Break it into milestones of one month worth of expenses each, this helps you reach smaller goals on the way to your eventual goal of an emergency fund.

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Financial Insurance

5 Steps to Lower Your Car Insurance Rates

car insurance lower the rate

The cost of owning a vehicle quickly adds up between fuel, maintenance, and insurance. Any little bit of money you can save makes a difference. While you might feel like you don’t have any say in your car insurance rates, there are things you can do to reduce the price.

The most obvious way to lower your premium is by being a safe driver. People with good driving records automatically get lower rates, but even if you have a few blemishes on your record, there are steps you can take to reduce your car insurance rate.

1. Check Insurance Rates Before You Purchase a Car

If you are just at the beginning stages of buying a car and getting insurance, do your research in advance. Not all vehicles are considered “insurance friendly.” Car insurance providers determine premiums based on a car’s repair cost, safety record, value, and the likelihood of theft. For example, a sports car is more likely to be crashed, stolen, and expensive to repair. As a result, insurance companies charge you more money because there is more liability.

On the other hand, some vehicles can get you much lower insurance rates based on safety features. Some auto manufacturers build their cars to withstand crashes better than others. They may also include special features, such as:

  • Brake Assist
  • Collision Warning
  • Lane-Departure Warning
  • Blind-Spot Warning
  • Pedestrian Detection
  • And More!

2. Request a Higher Deductible

Whether you’re dealing with health, home, or auto insurance, your deductible always has a significant impact on your premium. You can lower your premium by increasing your deductible, but you need to find the perfect balance. While you could make your payment more affordable by dramatically increasing your deductible, you shouldn’t increase the deductible beyond what you can afford to pay in the event of an accident. 

3. Decrease Coverage on Older Cars

Older cars often aren’t worth the premium you are paying if you have too much coverage. In these cases, it would make more sense to reduce your insurance amount. For example, you could drop collision and comprehensive coverage if it would be more cost-effective for you to pay for the repairs out of pocket.

If you aren’t sure of your car’s value, we recommend that you ask a bank or auto dealer. You can also use a site like Kelly Blue Book to determine your car’s current value. With that information, you can change your coverage when it is time to renew your car insurance policy.

4. Seek out Auto Insurance Discounts

Did you know that many car insurance providers offer a variety of discounts? If not, you could be missing out on valuable savings. We recommend that you talk to your insurance company to see if you qualify for a low-mileage discount. This discount would be for anyone who carpools to work or works from home.

Other companies offer deals to good students or good drivers with clean records. You could even take a defensive driving course to lower your rate. Other discounts you may be eligible for include:

  • Multi-Car Discount
  • No Accidents in Three Years
  • Good Credit Record
  • Customer Loyalty
  • Combined Auto and Home Insurance
  • Anti-Theft Devices

5. Shop Around with Different Providers

Lastly, if you still aren’t satisfied with your rates, you should consider shopping for a policy with another company. We suggest that you get a car insurance quote from at least three providers before you settle on one plan. Different companies and agents may be able to offer you different rates.

If you want to take the leg work out of insurance shopping, you can utilize several online price comparison tools. Your state insurance department may also be able to help point you in the right direction.

Take the First Step Towards Lower Rates

We suggest that you work your way through the steps if you would like to find cheap car insurance. However, you shouldn’t rely on price alone. We suggest that you find a company with a reputation for excellent service because there is value in that as well. The lowest rates might not always mean the best coverage. It is up to you to find the best rate for your needs and budget.

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Financial Tax Services

10 Mistakes to Avoid When Filing Your Taxes

10 mistakes to avoid when filing your taxes

With that awful April deadline looming, many people are getting a jump on preparing for their filings. If you are one of the millions of Americans that are filing early to get it done and over with, you might wonder what some common reason for delays or rejections are. Here’s a list of ten of the most common mistakes people make in their tax rush.

1. You Mess Up The Easy Stuff

Things like names and social security numbers need to be checked and rechecked for accuracy. Make sure the filing status is right, particularly if you’re single and qualify for head of household. These are all common reasons for rejections.

2. Entering Items On The Wrong Line

Make sure that if you’re filling out paper copies or Fillable Forms that you’re entering information in the right fields. Be sure your “rollover” or “contributions” on a line meant for “distributions” for example. Most tax software error checks this, but if you are preparing your own taxes, double-check.

3. Not Entering Info As It’s Been Reported To You

All taxable wages, dividends, and interest that you’ve earned and received a W2, 1099, or similar form for, needs to be reported. Enter the numbers carefully, and if you spot a mistake, you should report it to the issuer for a correction.

4. Taking The Standard Deduction Without Thinking

Many people take the standard deduction because it’s easier. However, in some situations, these people may be missing out on possible deductions by itemizing.

5. Missing Write-Offs

If you do itemize, be sure you are claiming all of the deductions that you are eligible for. Keep track of all your expenses and receipts, so that nothing is forgotten or missed. Don’t cost yourself money.

6. Skipping The State Healthcare Mandate

If your state has an individual healthcare mandate, do not skip it. The federal requirement has been eliminated, but a handful of states still require it.

7. Botching Negative Numbers

Do not use a minus sign for negative numbers. To list an amount as negative, use brackets. This is a common source of errors for Fillable Forms, but reputable tax filing software will automatically format the numbers correctly.

8. Not Paying Your Amount Due Correctly

If you owe, make sure you get credit for your payments. Include your 1040-V with your payment, whether e-filing or filing my mail. Payments can be made via federal free payment sites. The IRS also has a shortlist of authorized payment providers.

9. Forgetting To Tell The IRS How To Pay You

This one is important. If the IRS owes you money, make sure you take the initiative to list your payment preference. If you do not list your preferred payment method, they will automatically send a paper check, and who needs those delays, right?

10. Check For Typos

This is both spelling typos, as well as accuracy. Always take a few minutes to review your entire return, so that any potential mistakes are caught before they cost you time & money.

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Financial Insurance

Health Insurance: The 101 Guide

health insurance guide

Health insurance is a necessary product that provides you with coverage when faced with medical expenses. No matter your age or current health status, you need to have a health insurance plan in case you get sick or injured.

However, it can be difficult to find the best health insurance when you don’t understand it. There are so many complicated terms and coverage options, but you can learn more and make an informed decision with this health insurance guide.

Types of Health Insurance

Health insurance is broken into two main categories: public and private. Public insurance includes Medicaid, Medicare, and CHIP. The majority of people have private health insurance. An employee typically provides it, or you can purchase it through a marketplace.

Private health insurance can then be broken up even further:

  • On-Exchange: Private policies sold through government exchanges must cover the ten essential benefits and any other features required by your state. The insurer must offer plans at every metal tier. If you purchase one of these policies, you are eligible for tax credits and cost-sharing reductions.
  • Off-Exchange: You can you buy a plan directly from a health insurance provider, privately-run market, or third-party broker. No matter where you get it, the plans are still required to offer the ten essential benefits. Unfortunately, you cannot get any subsidies, but they can often provide more options at lower prices.
  • Employer-Provided: When your employer purchases and manages your insurance, it is part of a group plan. Again, it must follow the rules and offer the ten essential benefits, but you can usually get these plans at lower prices because of the group discount. With employer-provided plans, you don’t have the burden of searching the market for your own insurance.

Types of Private Insurance Plans

Aside from where you get your private insurance, you also need to consider the type of policy that best fits your needs.

Health Maintenance Organization (HMO)

HMO insurance plans restrict you to a selected network of providers, and you don’t get any coverage outside of your network. All of your care and referrals must be coordinated by an in-network primary care physician. Some people find them to be too restrictive, but they offer lower premiums based on deals they have with their network of healthcare professionals.

Preferred Provider Organization (PPO)

If you need more flexibility with your insurance, a PPO lets you choose between in-network or out-of-network providers. Costs will be lower for in-network care, though. You also have the option of seeing specialists without a referral. The flexibility comes at a price, so you can expect higher premiums with this plan.

Exclusive Provider Organization (EPO)

For a mix of the PPO and HMO, get an EPO. These plans still allow you to see a specialist without a referral, but you can’t seek care from out-of-network providers. Because of this, EPO premiums tend to fall in between HMOs and PPOs.

Point of Service (POS)

A POS plan is also a mix between PPO and HMO. You have a primary care provider coordinating your care, but you also have access to out-of-network options! With this plan, in-network care is more affordable, but you need a referral for in-network specialists.

Metal Tiers from Which You Can Choose

As we mentioned with the on-exchange insurance, you have plans at every metal tier, but what is a metal tier? They are simply categories based on how much you pay versus how much your insurer pays:

  • Platinum: 10% consumer & 90% insurance company
  • Gold: 20% consumer & 80% insurance company
  • Silver: 30% consumer & 70% insurance company
  • Bronze: 40% consumer & 60% insurance company

It’s important to note that these numbers don’t show the exact amount of your portion. It is just designed to give you an overall idea of how much you can expect to pay on your medical costs.

Factors that Determine Your Health Insurance Costs

Lastly, you need to know about the other factors that determine your costs so that you can understand your quote. Your out-of-pocket expenses largely depend on your:

  • Premium
  • Deductible
  • Copayment
  • Coinsurance
  • Maximum Out-of-Pocket Expenses

Get Your Health Insurance Quote

Now that you know more about the basics, you can start to find the best health insurance for your needs. If you don’t have an employer-provided plan, we recommend that you start by getting a health insurance quote from several different providers. You can then compare the quotes to find the best policy for your healthcare needs and budget.

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Financial Real Estate

10 Questions to Ask Your Mortgage Broker or Lender

mortgage broker

When you’re getting ready to shop for a mortgage broker or lender, you are preparing to make a huge financial commitment. Things can go as expected, but in some cases, there are may be significant fees that aren’t spelled out. Some lenders may even try to sell you on a different type of loan that could lead you into years of financial challenges.

1. What Loan Is Best For Me?

Any good, reputable broker is going to want to know more about you before they start loaning you large sums of money. You wouldn’t expect a medical diagnosis without any testing, your mortgage should be no different.

2. What Is The Interest Rate AND The Annual Percentage Rate?

Many brokers will calculate the APR slightly differently, and there is no APR for adjustable-rate loans. Be sure you have all info needed about your loan.

3. What Size Down Payment Do You Need?

Most sources will recommend about 20%, but that is not always needed. If you have good credit, you may be able to get a loan with less than 5% down. Lenders tend to increase closing costs and monthly payments with lower down payments.

4. Are There Discount Pints Or Origination Fees?

Discount points are tax-deductible, but each cost 1% of the total loan amount. Some lenders also charge origination fees for processing your loan application.

5. What Are The Total Costs?

Ask about the total costs. From the broker fees to any other fees that may be charged by a third-party. This can be appraisals, credit pulls, inspections, escrow, and more. There should be a legally required copy of the Loan Estimate that is given to you, which will include this information.

6. Are Fixed-Rate Loans Available?

Interest rates change daily depending on the Fed. This means that if you can get a loan with the interest rate locked in, it could mean saving thousands over other loan terms. Ask about fees though, some lenders charge for fixed-rates.

7. Are There Prepayment Penalties?

In some states, these penalties are not even permitted, therefore it’s very important to ask. Some penalties force the buyer to pay additional interest if you pay off early. Ask how long the financing offer was on the table.

8. Do You Do In-House Approvals?

Most loans need an underwriter’s approval, which can be dependant on conditions. If your lender does its own underwriting, that means your loan may be processed quicker. VA and FHA loans are known for taking longer.

9. How Long Is Needed To Fund The Loan?

In many cases, the time to fund a loan is around 40-45 days. You will have a closing date, so things will need to be coordinated. Inquire about the usual turnaround time, and if there is anything that can delay closing.

10. Are There Any Guarantees For On-Time Closings?

Closing can be stressful, and many contracts will include a date to close escrow by. This is usually subject to the ability of the lender to close on-time.

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Financial Real Estate

Selling Your Home? How Not To Lose Money

selling your home

Selling your home can be a challenge when you don’t know what it’s worth, or how to get the best price for it. We have a few great tips on how to maximize your profit potential when selling.

It Starts With An Experienced Agent For Selling Your Home

Working with an agent that has significant experience in selling homes in your area. You are going to want someone who is as invested in getting every dime of value out of your home as you are.

Occasionally sellers will try to save money by using an agent with lower commissions, but you are going to get what you pay for, as the saying goes. If an agent who charges even a single percentage point more can bring you 5% more profit, you’re already up by 4%.

The Price Has To Be Right The First Time When Selling Your Home

Pricing the home right initially is a huge benefit. The home will lose value the longer it’s on the market without selling. Opening the listing at the right price will benefit you in a couple of ways. First, it will encourage a short time on the market. Second, overpricing can not only cost you time, it can cost you money, as people will know that it is overpriced, and will use that in negotiations. Leveraging a skilled agent can help you get the best price initially.

Make sure you have personally researched local listings and recent sales. Look for trends. Touring open houses can also give insight into what is on the market. Call your bank and asking for a beneficiary demand can also give you an idea of what the home is worth.

Preparation Is Key

This one might cost a little bit of money, but the value added to the potential sale should far exceed what you put into it. This is the stage where you spruce up the cosmetic appearance and curb appeal of your soon-to-be-former home.

Basic home repairs can count for a lot here, as can a fresh coat of paint in several key rooms. Also make sure you pay attention to your landscaping, maybe hire a crew for an afternoon to get it ready for the weekend showings. This can help first impressions be great.

Keep An Eye On The Fees

When you receive an offer from a potential buyer, the offer will list the fees the buyer expects the seller to pay. Sometimes, the buyer requests inspections or other closing concessions. These can all be negotiated, and if they request a percentage toward costs, you might consider raising the price to help offset that.

Be sure to negotiate, particularly on the fees. The same goes for a home warranty, if the buyer wants reports for inspections or pests, for example, make sure you cap the potential expense that may make you liable for. Also shoot for the end of the month for closing, so that you can save a little money in interest.6

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Financial Real Estate

How to Find the Right Real Estate Agent for You

selling your home

Regardless of whether you are buying or selling a home, it’s very possible you would reach out to a real estate agent for guidance and help through the process. How do you know how to find the right real estate agent for your needs?

With realtors, full-time, part-time, and even family friends and relatives in the business, how do you know who to choose, or even how to evaluate a potential agent? We’re going to take a look at some of the factors that you should consider.

1.   Use A Professional

This cannot be overstated. There are part-time agents and agents that essentially do real estate as a hobby, but not as a career or even a full time job. When you are buying a home, and especially when you are selling a home, you want a real estate agent that is experienced and has a track record of closed deals and satisfied clients. They will be acting as your professional negotiator, so industry success is crucial.

2.   Sellers Need Special Attention

If you are selling your home, you will need the attentive service of a full-time, professional real estate agent. Having someone stop by and throw a “for sale” sign in your yard doesn’t cut it anymore, and it definitely won’t result in a sale.

A seller is going to want a real estate agent that will be proactive in their search for potential buyers. Particularly valuable real estate agents will be thoroughly familiar with leveraging technology in their trade. This is of extreme importance since most people will be viewing your listing on an app or website.

This also means they will need to be able to provide good pictures, enticing descriptions, and provide the details that buyers are hungry for.

3.   The Right Agent For Buyers

The buyers of new homes also need a particular type of attention in their quest for the perfect home. They benefit heavily from a real estate agent that has a history of successful buys and closed deals. Many real estate agents only sell a few homes a year, so finding one that has made significantly more than that is an indicator of quality and expertise.

Average real estate agents will simply search the MLS, and go through the listings with the potential buyers, without devoting much effort or care to the overall results. A great agent will find great homes that are about to hit the market and may be able to get a potential buyer into a very advantageous place to make an offer.

4.   Know The Difference Between Realtors And Real Estate Agents

Remember that not all real estate agents are going to be realtors. A realtor is a trademark of an organization called the National Association of Realtors, which is a professional organization with a formal ethics code. There are similar ethical standards in place by federal and many state agencies, but the NAR is additional.

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Financial Real Estate

Real Estate Tips for a First-Time Home Seller

real estate tips for selling your home

While buying a home often revolves around emotions, and how the house “feels” as a home. Selling should be detached as much as possible from that emotional aspect so that it can maximize the profit potential of the seller. These tips will apply to anyone putting a home on the market for the first time, as well as anyone who may need a quick review of some best practices.

1.   Make Sure You Have An Accurate Price Listed

This is one of the areas where having an experienced and reputable agent can help you immensely. Particularly one that has already had success in your general neighborhood. Make sure that they will perform a comparative market analysis for you. This should help you set your price as high as possible while not deterring offers or needing to reduce your price.

2.   Staging Can Add Incredible Value

Get advice from your agent on prepping for the sale. Many homes can benefit greatly from being professionally staged prior to an open house. Most homes show better and get more positive results from having about half of the furniture removed before showings. Professional home staging can add significant leverage for appeal and selling power.

3.   Stay Flexible With Showings

You may have to have several showings, so if they are too much of an imposition, or if watching someone tour your home seems weird, consider just not being around for the first weekend your home is on the market. This will allow your agent to show your home at times that work best for the prospective buyers.

4.   Host An Open House For Potential Home Buyers

If you have had your home staged, you may get noticeable benefits from hosting an open house. Your agent will know if this will be a viable option for your home. Some homes may not be conducive due to traffic patterns in the area, or even the home layout.

If there is a reasonable expectation of a benefit from the open house, put signage nearby, preferably on the main road likely to draw in viewers from the traffic. Sometimes all someone needs to know your house is the one, is to walk through it.

5.   Get The Commission Details

Don’t hire an agent purely based on a cheap commission. Many times the agents who offer a reasonable standard commission should be seriously considered. Don’t expect a cheap agent to give your listing the full service and attention it deserves. Likewise, be sure that the agent you do go with has a proven track record of selling homes, and of the sellers being satisfied.

6.   Respond Quickly To Home Buyers

If you’re putting in serious effort to sell your home, make sure you put in serious effort to respond to offers. It’s not uncommon for purchase offers to expire relatively quickly. Even if they don’t, prospective buyers will not appreciate waiting for the acceptance of their offer, or possibly even more frustrating, a counteroffer. Responding the same day, or within 24 hours, is ideal.

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Financial Real Estate

Types of Contract Contingencies for Homebuyers

Contract Contingencies for Homebuyers

Buying a home for the first time or the 15th time requires a lot of detailed work. It can even be a bit nerve-wracking for everyone involved. To help protect homebuyers and sellers, contract contingencies have become a common-place way for anyone to work within the deal and get their money back.

What are Contract Contingencies?

Contingencies are built into contracts as a way for prospective homebuyers to cancel the contract without the penalties that were typically incurred. Homebuyers can also get back their earnest money deposits which help lower the risk for buyers when they’re looking to purchase.

Common Contingencies

Detailed contingencies vary from state to state as some take different views of different inspections. Whether it’s roof inspections or septic tanks, before you buy a home you’ll need to research which ones are specific to your state. There are a few common ones that are standard across state lines!

Appraisal

This is when the home is checked out and evaluated to determine what the purchase price will be. So what happens if a home is appraised at a much lower value than originally thought? Buyers may back out of a sale when the lender doesn’t want to approve the mortgage amount.

Home Inspection

Before buying a home, buyers are encouraged to have the home inspected. If the home has issues and the buyers request a repair, the seller must first receive a copy of the home inspection before making repairs. During this stage of the buying process, the buyers want to drop out due to difficulty to repair issues, the home inspection contingency allows them to do so.

Lead-based paint

In many homes built before 1978, lead-based paint was used all over the place. Buyers have ten days to inspect this paint. If it’s found they’re allowed to drop out of the deal through the lead-based contingency.

Wood Destroying Pest Inspection

Who doesn’t love some little neighbors already burrowing into the woodwork? If pests or dry rot is found, the contract will specifically stipulate who needs to deal with the issue. Additional costs may be incurred during this time causing the buyers to can drop out of the deal in general.

Roof Inspection

Your roof does a lot more than just keep the rain off your home! During home inspections, buyers can hire a roofing company to do a complete roof inspection. They may even call off the deal if there’s too much damage. Putting in a new roof or repairing something that’s severely damaged is costly and may not be worth the price.

Sewer Inspection

Sewers can be delicate contraptions and easily susceptible to tree roots or deterioration over time. During a sewer inspection, plumbing companies check out the pipes for damage so buyers can determine if it’s sound before going forward with the sale. Installing a new sewer system is very costly and to put one in right after buying may be too much for homebuyers.

Takeaway

Buying a home is a risky business. Getting all of your inspections done on a new home is one of the best ways to be sure you’re getting exactly what you want. Contingencies offer you an escape route in case the home doesn’t stand up to scrutiny. Take your time and get all of your inspections completed before signing the final papers!