The Basics of Money and Credit

In this series, Our team shares their thoughts on the basics of Money and Credit. These topics are typically covered with new customers.

First, let’s start with the basics of credit.

What is Credit?

Credit is other people’s willingness to let you use their money that you will repay sometime in the future.  It is a privilege, not a right. By “other people,” we typically mean banks, credit unions, and credit card companies.

“Credit” can be used interchangeably with “loan.”

How do you earn credit?

To earn the trust of the lenders in the form of “credit, you need to demonstrate you can borrow money and pay back on time. Check out a good article by Nerd Wallet: How to Build Credit

What are the types of credit?

Categorized by how the credit is extended and how it is paid back, credit falls into the following three categories:

Installment Loan: require regular payments, usually monthly, until the principal is paid off. Car loans, student loans, and mortgage all fall in this category.

Revolving Credit: includes bank credit cards, store credit cards, and home equity line of credit. You are required to pay at least the minimum payment by the due date. You can pay the minimum amount, the full payment or anything in-between. You can keep using the credit as long as you pay the minimum and stay within the credit limit.

Service Credit: used for monthly utility bills, such as electricity, gas, and yes, your cell phone bills. You set up an account, use a service and get billed by the service provider.

What Are the Advantages of Credit

You can get instant gratification, “buy now and pay later”;
Usually, no interest is charged when credit card bills are paid in full by due date;
Credit cards are safer to carry around than large sum of cash around;
Keep record of how you spend money so you can analyze your spending habit;
Some credit cards offer “bonuses” such as cash back or frequent flyer miles.

What Are the Disadvantages of Credit

Interest costs can be very high. How high? 15-20% for unpaid credit card balance is very common.
If you only pay the minimum each month, then the pay-off period will extend to very long
Since you owe so much money to other people already, you may not have much buying power left in the future

What is a Credit Report?

Lenders do not take your word for it when they come to determine whether to extend credit to you; instead, they pull your “credit report”.  It is kind of like your “school report” but lists different things. It describes your past use of credit, such as being on time in paying back debt, types of credit accounts opened, number of loans applied for, and a number of outstanding balances.

Three companies, called credit bureaus, gather information about you and give it to lenders. These three companies are:

Equifax (www.equifax.com)
Experian (www.experian.com)
Trans Union (www.transunion.com)

You can order your credit report once a year to check for errors or see if your identity has been stolen. Following the directions that come with the report, you can fix the errors.

What are Credit Scores?

Sometimes referred as a FICO score, a credit score is a three-digit number that describes your trustworthiness, or your future bill-paying behavior. It ranges from 300 to 850.  Lenders look that the number and decide whether to give you a loan and on what terms if any (interest rate, down payments, etc.).

These factors affect your credit score:

Previous payment history
Amount money owed
Number of recent credit inquiries
Length of credit history

These are only a few of the money basics we go over with new clients. If you have any questions or need help in any of the areas we discussed here, please don’t hesitate to reach out for a Free Initial consultation with one of our counselors M-F 9am-5pm pst at 854-888-0321

Reverse Mortgage 101: Debunking Common Myths

With so many scams targeted at the elderly, many people wonder whether reverse mortgages are a legitimate option for generating cash or simply another scheme that exploits seniors.
Simply said, a reverse mortgage or Home Equity Conversion Mortgage (HECM) enables homeowners 62 years and older to convert part of their home equity into tax-free cash. It may prove a good solution for seniors whose savings accounts are dwindling or who simply need a little extra income each month.
If you or someone you love is considering this option, read on for Take Charge America’s top six reverse mortgage myths:

Myth: Reverse mortgages are exactly the same as home equity loans. The only similarity between a reverse mortgage and home equity loan is that both use the home’s equity as collateral. With a traditional home equity loan, borrowers make regular monthly payments toward the principal and interest. With a reverse mortgage, the loan isn’t due until you sell the home, live away from the home for 12 consecutive months, fail to pay property taxes or insurance, or pass away.
Myth: Your heirs will not inherit your home. Your estate will inherit your home, but there will be a lien on the title, which will include the financial proceeds from the reverse mortgage plus interest.
Myth: You may be forced out of your home. Actually, this loan was designed to help seniors continue living in their own homes for the rest of their lives. In fact, you will never be evicted or foreclosed upon unless you fail to pay property taxes and insurance or let your home fall into disrepair.
Myth: You can lose Medicare and Social Security. Not true. Reverse mortgages have no impact on Medicare and Social Security, though needs-based programs like Medicaid may be affected. To keep Medicaid benefits, you will need to manage your monthly withdrawal to ensure your income does not exceed Medicaid limits.
Myth: Reverse mortgages are costly. Yes and no. With a reverse mortgage and any other home loan, you are required to pay origination fees and closing costs. Depending on the type of loan you select, you may also be required to pay upfront mortgage insurance. That said, your heirs will never have to repay more than the home is worth, even if your loan balance is higher than the appraised value.
Myth: A reverse mortgage is a last-ditch option. Actually, reverse mortgages are best used as part of a comprehensive financial plan – not a last resort for seniors who can’t make ends meet. Under the right circumstances, this type of loan will supplement your income to allow you to live more comfortably in your golden years.

Before obtaining a reverse mortgage, the U.S. Department of Housing and Urban Development requires seniors to undergo reverse mortgage counseling from an approved third-party organization like Take Charge America. Certified HECM counselors guide seniors through the process, loan terms, financial and tax implications, and alternatives.

Tips to Save Money on Moving Expenses

Whether moving across town or across the country, relocating can be difficult and expensive; often riddled with unexpected costs. A little planning can go a long way to help keep costs down and reduce financial stress. Here are nine tips:  

Decide on Movers: Hiring a mover can be risky. There are many consumer complaints in this industry. If you need professional help, research three movers with the Better Business Bureau each carrying an A rating. Get estimates and compare.
Sell or Donate – The more you move, the more you will have to pay, especially if you’re hiring a professional or renting a truck. Take a hard look at your stuff and decide if it really needs to be moved, or if you can sell or donate it. Consider hosting a garage sale or using sites like Craigslist.org to sell items.
Examine Your Appliances – If you’re taking major appliances, account for professional servicing or installation costs. It may not be worth the cost of moving old appliances needing frequent repairs.
Eat Up – Leading up to your move, eat foods in your pantry, refrigerator and freezer. Restock after the move.
Don’t Buy Boxes – Check grocery, warehouse stores or recycling facilities for boxes, or ask friends and family for spares.
Consider a Pod – If you’re moving far, a pod may prove cheaper than a moving van or professional moving company, especially when considering the cost of gas.
Select “Off” Days – Saturday is the most popular day to move. It’s also the most expensive. Prices for truck rentals or professional movers are higher on weekends. Consider moving mid-week to avoid the premium cost.
Manage Utilities & Services – Contact your phone, cable and utility providers well ahead of your move to set a discontinuation date. This will ensure you’re not paying for services after you move. You may also need to cancel or transfer other subscriptions, such as gym memberships, pool maintenance and periodicals.
Get Insurance in Order – Make sure your auto and home or rental insurers are aware of your move so they can adjust your premiums or transfer coverage.

 
Click here for more budgeting tips!

How to get Out of a Timeshare

Timeshares can be a convenient, cost-effective vacation option. But as your life changes, you may find yourself making payments on a timeshare you never use and you’d probably rather be rid of it. Getting rid of a timeshare, however, may turn out to be more complex than you anticipate. Take a look at these tips for getting rid of a timeshare, as well as red flags you need to watch for during the process.
Determine Its Value- Check out dedicated timeshare websites such as RedWeek or Sharket to research the value of your timeshare. Keep in mind that current asking price doesn’t guarantee you will be able to sell for that price.Find an Agent Who Specializes in Timeshares- Even if you have a real estate agent who has helped you buy or sell your home, you’ll want to find an agent who specializes in timeshares. Ideally, it should also be someone who knows the resort well. Visit the Licensed Timeshare Resale broker Association website to find a qualified agent.
Check into Buyback Programs- Many timeshare resorts have buyback programs in place. If yours does, it’s likely the easiest, most straightforward way to get out from under your timeshare. Even if they don’t have a formal buyback process in place, it’s worth asking the resort if they will take over your timeshare. 
Sell it Yourself- You also have the option of selling your timeshare yourself on RedWeek or eBay. Use photos that highlight the unit’s unique features and be sure to write a thorough description that answers common questions. 
Rent Out the Unit- Selling your timeshare is just one option. You can also rent it out to cover the costs. You’ll probably have an easier time finding renters than a buyer, especially if your timeshare is in a high demand area. 
Give it to Family, Friends or Charity- If you’re having trouble selling your unit, you can try giving it away. You won’t make back any money, but you will at least be out from under paying monthly and annual fees. Be aware that not all charities accept timeshare donations; you might have to do some research to find the ones that do. 
Beware of Scams- As with most financial transactions, selling a timeshare comes with its own set of scams to look out for. Be wary of mailer or phone calls claiming to have an immediate buyer for your unit – provided you pay hefty upfront fees. There is, of course, no buyer. And you could be out thousands of dollars and have little chance of recovery.

Fraud: Prevent it with Knowledge of Common Scams

Almost all wire fraud starts with contact from a stranger. Protect yourself from wire transfer fraud. Never wire money to someone you don’t know. Never. 
IRS Extortion Scam
Have you received a phone call from a person claiming to be from a government agency asking for money to cover “back debts” owed to the IRS? They may say that you can wire the money or send a pre-paid debit card to settle this amount owed – and if you don’t, you will face jail time. Even though these calls may have a Washington, D.C. area code or misleading information on caller ID, rest assured that any “government employee” contacting you and asking for money upfront is a scammer.
Refund scamsDid you receive a call from someone claiming to work with the FTC?  Was the caller promising to help you get a refund from the agency?  This is a SCAM.  Never send money or provide bank account numbers and other sensitive information to those promising you refunds.  Remember; the FTC doesn’t make outgoing phone calls to contact people, they don’t ask consumers to provide banking or sensitive information, they don’t ask you to send money, and if refunds are part of a FTC settlement, the FTC provides the funds by check.  Even if the Caller ID says the name of an organization you recognize or trust, be skeptical.  Scammers will use technology which can display legitimate numbers which coerce you into responding.
Disaster reliefIn times of disaster, it’s important to be aware of charity scams. There are many legitimate ways to provide support to help people impacted by floods, earthquakes, fires or other natural disasters. If you’re eager to make a donation, give in a way that you have donated before or through a trusted organization or business where you fully understand how the funds are being collected and used.
It is important to never send funds using a wire transfer service like MoneyGram to someone you do not know. Occasionally, MoneyGram will support donation programs with a well established charity.
Foreign lotteryThe U.S. government recently issued a national warning about the continued defrauding of citizens taking place through a foreign lottery or sweepstakes scam. Be aware that if you receive a notice about winning a lottery, no matter how official it looks, and are required to pay a fee to claim your winnings – this is a scam.
What to be aware of:

A federal statute prohibits mailing lottery tickets, advertisements, or payments to purchase tickets in a foreign lottery
Be leery if you do not remember entering a lottery or sweepstakes
Beware of lotteries or sweepstakes that charge a fee prior to delivering your prize

Be wary of demands to send additional money as a requirement to be eligible for future winnings

Buying a vehicleHave you found a great vehicle online or in an advertisement with a price too good to be true? Are you being asked to send the down payment through a MoneyGram money transfer?  Unfortunately, it’s a SCAM. Do not send money for the vehicle to the seller or a payments representative. The vehicle purchase scammer may try to convince you to pay through MoneyGram to avoid sales tax and get a great price. They may even send you a letter or e-mail of authentication telling you that you have purchased the item, but in order to deliver it you need to wire funds first.  You will not receive a car or truck. Once money is wired and received, it cannot be recovered and, unfortunately, you will be at loss for any money transferred.
Sending money to a strangerMoneyGram never recommends sending money to a stranger. Any monies received by a stranger cannot be recovered and unfortunately you will not get your money refunded back to you. “MoneyGram is very safe and secure when sending to someone you know and trust.”
Lottery/sweepstakesLegitimate lottery or sweepstakes NEVER require people pay money up front. Get a letter, call, or e-mail saying you won something (money or a prize), but before you can collect the prize you need to send money to pay for taxes, customs, or any fees? But you didn’t buy a ticket or enter a sweepstakes. This is a SCAM. Don’t send transfer money to the people who are stating you have “WON” something but need to send them funds to collect your winnings.
Internet purchasesHave you found something online that interests you – a puppy, a car, an apartment for rent or any item for sale? Does the price for the item seem to be too good to be true and are you being asked to pay for the item through a MoneyGram money transfer? Unfortunately, this is a SCAM. Do not send money for the item to the seller. They may even send you a letter or e-mail of authentication telling you that you have purchased the item but need to wire funds first. Do not send the money. It is a SCAM. You will receive no merchandise. Once money is wired and received it cannot be recovered and unfortunately you will be at loss for any money transferred.
Relative in needDid you receive a phone call from a grandchild or a family member? Or a “lawyer” or “police officer” there with your family member? Are they in despair because they have been detained in Canada for not having a fishing license or for catching a protected species of fish? Have they been in a car accident? Are they asking for money to pay fines or for car repair? Did a relative call because they need money for a family member in medical need or for medicine? THIS IS A SCAM! Use precaution when sending money in any of these situations. These callers can request that you send money anywhere in the world. If you cannot verify with your family member (calling their number you had before this call, not the “new number” the caller gives you) that they are requesting money and aren’t sure about the transaction, do not send the money. You will be at a loss for any money that is sent.
LoansDid you receive an e-mail or letter about getting a loan? Were you asked to send money for loan fees, taxes, service fees, advance payments, or any other reason? This is a SCAM. Do not send money to a loan company to obtain a loan. If the money is wired and received it can not be recovered. You will be at a loss for the money you have sent.
Check/money orderGet a check or money order in the mail with instructions to first cash it at your bank and then send some of the funds to someone else through a MoneyGram money transfer? If so, the check/money order is counterfeit and your bank will make you cover the loss. Be aware that counterfeit checks are very hard to identify. You may have been promised a percentage of the check for employment or because of an over payment. This is a SCAM. Do not send the money and do not cash the check.
RomanceDid you meet someone through a personal ad, e-mail, chat room or an instant message? Did they ask you to send them money for travel or to help them financially? Do not wire the money – this is a SCAM. Any money received by this person cannot be recovered and you will be at loss for any money sent
Newspaper adsHave you found something for sale in the classifieds or any type of newspaper ad? Did they ask you to pay for the item through a MoneyGram money transfer? This is a SCAM. Do not use a money transfer to purchase an item from a stranger. It is not safe to use a money transfer service when trying to purchase an item.
Elder abuse scamA stranger begins a close relationship with you and offers to manage your finances and assets. Or, signatures on documents do not resemble your own signature. Don’t get duped into parting with your money through financial abuse scams. Scammers will try to manipulate you into turning over property and/or money, and this can leave your cash, checking account or even life savings completely wiped out in one transaction. Financial abuse scams can take many forms, including telemarketing fraud, identity theft, predatory lending, and home improvement and estate planning scams. Never trust your money with anyone you don’t know.

What to do if You Can’t Make Your Car Payment

Sitting down to pay your bills and discovering you’re coming up short for your car payment is a scary  moment. You rely on your vehicle for so many things, and the though of not having it is shocking. Fortunately, there are things you can do to avoid getting to the point where your vehicle is repossessed. Here’s what to do if you can;t make your car payment:Double Check Your Budget- Before you decide for sure you can’t make the car payment, take a look at all your other spending. See if there are things you can eliminate for the months, such as dining out, that will free up money to allow you to pay. You can also try selling some assets, such as unused fitness equipment or forgotten jewelry, to make up the cash shortfall. 
Contact the Lender- If you review your budget and realize you’re still not going to be able to pay, contact the lender. Being proactive will help ensure you have the most options available. If you are experiencing a temporary financial hardship and anticipate being able to resume payments in the next month or two, the lender may be willing to accept a reduced payment or defer payments for a short amount of time and add those months on the end of your loan. Refinance Your Loan- You may be able to refinance your loan to achieve a lower monthly payment. However, this option is usually only available to consumers with a very strong credit, and not all vehicle loans are eligible for refinancing. If your loan does qualify, you may have better luck refinancing through a credit union or community bank. 
Sell the vehicle- If you know your financial challenges aren’t going away anytime soon, consider selling the car to pay off the remainder of the loan. do your best to sell it for enough to pay off the loan in full. If you sell if for less, you will have to make up the difference before you can transfer the title to the new owner. 
Turn Over the keys- Sometimes referred to as voluntary repossession, you can surrender the vehicle if you know you won’t be able to pay going forward. It’s not an ideal solution, but it will stop the car from being repossessed at a time and place you’re not expecting. Keep in mind that you will still have to pay the deficiency balance, which is the difference between what you owe and what your car sells for at auction.
If you find yourself unable to make your car payment or any other bills, or free Credit Counseling can help you develop a realistic budget and a plan to get back on track. 

Financial Resolutions for 2017

The first of the year always brings with it the promise of new beginnings and the burden of self-improvement. Fueled by the nostalgia of the holidays, armed with a year’s worth of regrets, and unleashed by the ceremonialism and ritual of the calendar’s turn, some 45% of Americans decide to make New Year’s resolutions each January. They are, it seems, taken by the spirit that led Benjamin Franklin to write that one should, “Be always at war with your vices, at peace with your neighbors, and let each New Year’s find you a better man.”

We all certainly have our fair share of vices, especially as they relate to money. Financially-themed promises for improvement are, unsurprisingly, always among the most popular resolutions made each New Year. Unfortunately, only about 8% of resolution-makers are ultimately successful in their endeavors – a statistic that does not fare well for money management improvements.

Neither historically low odds of success nor uncertainty about the best resolutions to make should discourage you from improving your financial habits in 2017, however. We have come up with the following list of Financial Resolutions for 2017, along with some helpful pointers for bringing them to fruition.

-Get Reacquainted With Your Finances and Reassess Your Priorities: The first step toward financial improvement is to get the lay of the land. That means carefully reviewing at least one of your major credit reports, in addition to checking the status of all your financial accounts, taking stock of your assets and debts, and evaluating your monthly cash flow.

Going over your fiances at the account level will enable you to identify spending trends that need adjustment as well as determine whether a new account would save you money. Not only are your financial needs bound to change from year to year, but there are also a number of interesting market developments that you would do well to take advantage of. For example, credit card companies are offering extremely lucrative sign-up perks – such as $625 initial bonus or 0% for the first 21 months- to new customers with above average credit standing. Online- only bank accounts now offer vastly superior terms to branch-based accounts as well, and you can still save a lot of money by refinancing your mortgage in the current low-rate environment.

-Sign Up for Credit Monitoring: IT’s quite stressful to be a consumer in this day in age, with our new digital economy spawning unfamiliar financial threats and extending the time frame for vigilance well beyond traditional banking hours. But new tools have also emerged to ease our transition to this new 24/7 personal finance environment, and credit monitoring is among the most helpful.

Credit monitoring is essentially a surveillance system for your credit report, notifying you anytime key information on your file changes. It therefore, increases the odds that you will find out about any administrative errors or suspicious activity before it can cause much damage. The biggest thing to watch out for is the frequency with which the underlying reports that are being monitored get updated.

-Make a Strategic Budget: Only about 40% of adults have a budget, according to survey data form the National Foundation for Credit Counseling. The fact that we’re on pace to rack up nearly $68.5 billion new credit card debt during 2016 is perhaps a bit less surprising as a result. But those statistics also signal the need for greater urgency on our part. We, as a country, need to cut back if we want this prolonged economic recovery time to continue.

The best way to make a budget is to gather together all of your bills from the past few months and then make a list of all your recurring expense in order of importance – with true necessities like housing, food and health care obviously taking precedence. You can then compare the cost of these expenses against your monthly take- home and eliminate any outlays that would outpace your spending power. After that, just make sure to compare your ensuing monthly spending to your planned budget to make sure you’re abiding by it.

-Implement the Island Approach: The Island Approach is a personal finance technique based on the theory of comparmentalization that encourages consumers to isolate different financial needs on different financial products- as if they are a chain of related islands. For example, this might entail getting one credit card for everyday purchases that you can pay off in full by the end of the month and another for revolving debt.

Doing so will enable you to get the best possible terms on each card (i.e. great rewards earning rate on your everyday card and an extended 9% term on your debt card) rather than compromising for middling terms on a single card. It will also help you to reduce the cost of your debt, since everyday purchases won’t be inflating your average daily balance, and garner valuable perspective on your finances – if you ever incur interest on your everyday card, you know you have spent too much that month.

-Automate ad Much as Possible: One of the most easily avoidable mistakes that people make in regards to their finances is missing due dates. Often due to pure forgetfulness, tardiness can have a serious ramification on your financial life – such as missed credit card payments fostering credit score damage.

Luckily, avoiding such a negative event is as simple as setting up recurring monthly payments from a checking account. You can do so for your full balance, the minimum amount required or a customized amount, and this applies to a variety of different types of bills – from credit cards to cable. Of course, you will have to remember to review your monthly statements in order to avoid being overcharged or missing a sign of fraud, but you’r not on the clock for that like you would be with a manual payment.

– Build an Emergency Fund: Roughly 56% of Americans do not have a rainy day fund, according to the Financial Industry Regulatory Authority’s National Financial Capability Study. Like someone without insurance, folks who lack an emergency fund are merely tempting fate and putting themselves at risk of financial catastrophe in the event of prolonged job loss or significant emergency expenses. Building up some monetary reserve should therefore be one of the first orders of business for any financial makeover.

While we recommend ultimately building a fund with about 12-18 months “take-home income, it’s important to understand that won’t happen overnight. As a result, you needn’t put the rest of your financial life on hold until your emergency fund is complete, but rather chip away at it over time. That is key because we actually recommend creating a 6-month safety net before beginning to even pay down your debts in earnest. Doing so will help ensure that you do not end up right back where you started upon finally reaching debt freedom.

“Just as you might dress for success, spend for failure.” said Scott C. Hammond, a clinical professor of management at Utah State University. “Assume you will go 6-12 months every ten years without a pay check. Save accordingly. Live on a budget. Store a little food. Have a solid savings account with liquid assets.”

-Get Out of Debt: We clearly have a problematic, sordid love affair with debt. After curbing our enthusiasm for over leveraging during the struggles of the Great Recession, we have reaffirmed our affinity for it as the economic skies have cleared. We racked up an average of $41.1 billion in new credit card debt – a useful indicator of consumer spending habits – each year from 2011 through 2013, in addition to $57.4 billion in 2014 and a projected $68.5 billion in 2015. something must change.

Some of the steps mentioned above – including budgeting, automation and the Island Approach – will obviously help in terms of reducing your future reliance on debt, but the problem of what to do about existing balances still remains. The combination of a 0% balance transfer credit card and a credit card calculator can help the average household save more than $1,000 in finance charges and get out of debt months sooner than they would otherwise. Taking aim at your highest- interest balances first, while attributing only minimum payments to the rest, is also a strategic way to pay off what you owe at the lowest possible cost in terms of both money and time.

“I think credit card debt is one of the most difficult obstacles that people face,” says Deena B. Katz, associate professor in the Department of Personal Financial Planning at Texas Tech University. “It’s very easy to pull out a card and buy, particularly online or during the holiday seasons when you want to do special things for your family and it doesn’t need to come out of your pocket today. I believe that if you were buried in debt that a priority resolution would be to pay off your debt as quickly as possible to avoid overpaying for the things you bought on credit.”

-Improve Your Credit Score: In case you weren’t aware, the annual difference in cost between good and bed credit is roughly $650 in credit card payments, $1,400 on your auto loan and $2,300 on a mortgage. The savings inherent to good credit extend well beyond that as well, considering that your credit standings impact your insurance premiums, your ability to buy a car, rent an apartment and the types of jobs you can get – in addition to the loans you’re eligible for.

The best way to improve your credit is to maintain an open credit card account that is in good standing. The card will then report positive information to the major credit bureaus each month, either building out your thin credit profile or helping to devalue mistakes from the past. You don’t have to get into debt to benefit from the credit building capabilities of a credit card, unlike with a loan, and you don’t even need to make purchases with your card. If you don’t have the credit standing necessary to qualify for a normal credit card, you can always place a refundable deposit on a secured credit card and benefit from what’s tantamount to guaranteed approval.

– Save 16% More Than You Normally Would:  Most people are pretty good at wasting money. Many of us don’t have budgets or emergency funds; we rack up expensive credit card debt by the billion; and we prioritize short-term desires over long-term needs. After all, 1 in 4 people nearing retirement age have absolutely no money saved up, according to the Federal Reserve.

Retirement obviously isn’t your only savings need. You also need to save for college, weddings, vacations, ect. The best approach to meeting all of these savings needs is to establish separate accounts for each, which you fill with automatic monthly contributions from a bank account. This gives you some useful perspective on each of your goals and enables you to better track progress. Your goal for the year should be to boos the value of each of your accounts by 15%. This will obviously take hard work and sacrifice, but figure out how much you’ll need to put away each month in order to meet that goal and get cracking.

-Give Back to Charity: Charitable giving is beneficial in terms of self-perception, tax liability and basic humanity. Perhaps that is why monetary donations totaled more than $358 billion in 2016, according to data from Giving USA and Indiana University. Even though that represents a 60-year record, we should make it our mission to be even more benevolent in 2017, with special emphasis on donations involving money rather than time.

Why? Well, most people can actually make a bigger impact on charities by spending extra time at work and donating cash than by volunteering. More specifically, the average America – who earns $30,176 annually and volunteers one hour per week – would be able to donate more than 8,350 meals to hungry children, provide roughly 2,040 measles vaccinations or give nearly 170 refugees a year of clean water just by working an extra hour instead of volunteering, and than donating the proceeds. Unless you’re the Iron Chef, you’re probably not going to cook over 8,350 meals in 52 hours.

-Do Your Taxes Early: Up to 25% of Americans wait until April to file their taxes each year, according to the IRS. As with anything else, procrastination breeds mistakes and 2.6 million people made math mistakes on their taxes in 2015 – the most-recent statistics available. Many people also end up filing late and underpaying, incurring expensive penalties along the way. Starting your tax prep early is the best way to avoid these unfortunate events, not to mention lowering your stress levels. Not only can getting organized take a considerable amount of time, but foresight will also enable you to adjust your with holdings in order to avoid a tax deficiency as well as ensure that you are not over- or underpaying.

-Make Financial Literacy A Family Priority: While gradually improving in many ways, financial literacy levels in this country are still rather anemic. In fact, the U.S. ranked 14th globally for financial literacy in a 2015 survey by Standard & Poor’s, behind the likes of Canada, the United Kingdom and Germany – Just to name a few. What’s more, roughly 41% of Americans grade their financial know-how at a C-level or below, according to the National Foundation for Credit Counseling.

This is important not only as it relates to our finances, but also in terms of how our children will manage money once they mature. children tend to learn by example, which means yours are likely continuously internalizing how you handle money – information that will serve as the foundation for their future relationships with finance. You therefore need to do your best to improve your own financial performance in order to impart beneficial lessons upon your children.

You should also take steps to give your kids hands-on monetary experience while they’re young. This should begin with games – like Financial Football or Savings Spree – that are designed to teach kids about the value of money and encourage positive habits like saving regularly. Then, as your children age, you can provide them an allowance on a series of financial vehicles – starting with a prepaid card, progressing to cash and a checking account, and ending with a student credit card – while requiring them to pay some of their own discretionary expenses.

This will confer a range of practical benefits, from building account management skills to encouraging budgeting – especially if you actively participate and make the process fun.

-Change Your Email Password Every 3 Months: Cybercrime has become a major theme for both the modern consumer and corporate America, with a number of notable banks, retailers and entertainment companies getting hacked in recent years. In fact, there were roughly 750 data breaches in 2016 through mid-December, resulting in the exposure of nearly 188 million personal records, according to the Identity Theft Resource Center. And while there is only so much you can do if your credit card information gets pilfered from a store- all credit cards offer $0 fraud liability guarantees anyway – there are a number of steps you can take to otherwise make yourself a much harder target for fraudsters.

Perhaps the most important, yet underrated measure you can employ in defense of identity theft is a strong password for your primary email account that you can change on a regular basis. You can also add your cell phone number to your account contact information and enable two-factor authentication to take things to the next level. Protecting your email is essential because it is likely what you will use to reset passwords for other accounts, and thus serves as a gateway to your finances.

Robust email security doesn’t, however, represent the extent of the simple changes you can make to improve your anti-identity theft protections. For instance, shredding sensitive financial documents before throwing them away and putting a lock on your mailbox when you’re out of town will shield you from opportunistic criminals targeting your trash or correspondence. Making a credit card your primary spending vehicle and only signing for debt card purchases (rather than entering your PIN) will confer the most robust fraud liability benefits on you as well. Checking your credit report every few months will also enable you to spot fraudulently opened accounts before they do too much damage.

-Shoot For Top Physical & Financial Fitness: There is a clear connection between physical, emotional and financial health. Not only are health care expenses the leading cause of bankruptcy in the U.S., but they also comprise a great deal of our annual spending between insurance premiums, out of pocket costs, gym memberships and more. Money, work, the economy and family responsibilities – all financial concerns in one way or another – are also the most commonly reported causes of stress, according to the American Psychological Association.

This all serves to underscore the importance of getting our financial houses in order as well as getting regular exercise and engaging in the other healthy practices aimed at keeping our health care costs low. It won’t be easy, but this is one resolution that will certainly pay dividends across the scope of your life.

-Help Other Consumers: We consumers need to stick together. After all, it’s hard enough trying to lead a financially responsible lifestyle in this era of economic turmoil, political obstinacy and unbridled spending without some support. One of the best ways to aid others in the pursuit of financial responsibility is to share your experiences with different financial products, companies and professionals.

Reviews have the power to drastically improve transparency in the personal finance space – as has been the case with the hospitality industry -enabling people to avoid the bad apples, gravitate to the best deals and ultimately save money. That is especially true now that the Securities and Exchange Commission is allowing financial ad visors to interact with consumer review for the first time. The financial industry is rip for disruption in the regard, as there are likely more review for the dog walkers that for the professionals managing our retirement plans.

-Stress Test Your Finances: People are generally optimistic in nature, which means it can be difficult to imagine and prepare for the worst0case scenarios. Responsible financial management is all about preparation, though, which means it is very important that you put your personal finances through the paces – much like banks and other financial institutions are required to do in order to verify their stability.

For example, you may wish to determine if your finances are equipped to handle job loss or the death of the family’s breadwinner. This clearly isn’t an uplifting exercise, but it will enable you to determine if you have the savings, insurance policies and contingency plans necessary to overcome potential hardship.
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Keeping your 2017 New Years Resolutions

For many of us, New Year’s resolutions often vanish in days – weeks at most.

“Weight loss” is the No. 1 New Year’s Resolution with 21 percent of respondents, followed by “improve finances” with 14 percent. Nearly half are successful by the six-month marker; the rest give up during that timeframe.

Your personal finances require a better outcome. Even if you’ve resolved before and failed, there are still ways to set a course and stay on track.

Resolution-keeping starts with good resolution-making. It’s one thing to say, “I want to pay off my student loans,” or “I want to retire early.” It’s another to measure the size of the challenge, identify obstacles and build a task list to make that goal happen. So if you’ve committed to a particular resolution, go through it again and identify the behaviors and practices you need to change.

For example, if you wonder whether you’re saving enough, maybe your first resolution is to make or review your budget to get a realistic picture of where your finances stand at all times.

Want to add some fairly easy money resolutions that can help your finances overall? Consider the following:

Know your net worth. Budgeting involves day-to-day tracking of finances, but having a quick way to determine your net-worth – your assets minus your liabilities – offers the biggest picture of how you’re doing and what next steps you might take to improve your circumstances. Make this calculation an annual kickoff to the New Year.

Build an emergency fund. If you don’t have money equal to three-to-six months of daily expenses set aside, make that a priority. Shoring up an existing emergency fund – and evaluating whether it’s still adequate to your needs – is probably one of the best ways to keep other financial goals on track. After all, when emergencies happen, it pulls funds away from bills you need to pay as well as savings and investment goals.

Automate. Depending on your comfort level with all things digital, virtually every aspect of your financial life can be managed online or with computer-based software. From setting up a basic online calendar to track pay dates, bill due dates and deposit dates for savings and investments, automation could help you create a daily series of reminders and action items that will keep your money issues on time and on track.

Recommit to retirement. If you’re employed or self-employed, here’s how to make a retirement savings resolution stick. First, make sure you’re signed up for a 401(k), 403(b) or 457 plan at work or a corresponding SEP-IRA, self-directed 401(k) or other self-employment retirement plan that fits your tax and financial situation. Then check what your maximum contribution is for your respective plan. Finally, through budgeting or a plan to bring in more income, determine how you can come as close to your maximum contribution as possible for the coming year. And of course, don’t forget about Traditionial or Roth IRAs that you can contribute to independently of these employer-based plans. All of these options can improve your retirement prospects while saving you considerable money on taxes.

Review your benefits and insurance. For most employed and self-employed people, open enrollment for health and other company benefits wrapped up before year-end. But that doesn’t mean you can’t spend time reviewing the choices you’ve made for health insurance, retirement savings or flexible spending plans, as well as reviewing your personal home, auto, life and disability coverage for potential savings and/or better coverage. If you work with a qualified financial planner or tax professional, you might want to bring up some of those questions with them.

Reset savings and bill repayment goals. By now, you’re probably getting a very good indication that most of your financial decisions are linked. Get some assistance in determining how best to address the amounts and types of bills you have so you eventually free up more money for savings and investments.

Set regular reviews. It’s generally a good idea to review your budget performance monthly to identify unusual items and plan for expenses you’ll have to tackle in the future. You may want to take an overall look at your finances in January and June to make sure spending, savings and investment goals are on track.

Bottom line: Making financial resolutions makes you feel good. Keeping those resolutions feels a lot better. Develop long-term money habits that position you for success.

7 Essential Financial Skills for Young Adults

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None of us were born knowing how to handle our finances. It’s a skill that has to be learned over time, often with mistakes- aka, learning opportunities- along the way. But there’s no reason young people have to learn all their financial lessons the hard way. Sending them out into the world with no financial foundation practically guarantees they will end up moving back in with parents or other relatives within a few months; and that’s not fun for anybody! Here are seven essential financial skills all young adults should have. 
Basic Budgeting- Understanding how to plan and maintain a budget is a foundation of financial health at every age. A budget is simply a way to understand how much money you have coming in, going out and where it’s going. And budgeting is easier than ever thanks to a multitude of mobile apps that do all the work for you. Bank Account Basics- While it’s doubtful most Millennials have ever written a paper check or kept a manual check registry, they still need to understand some banking basics, such as minimum balances requirements, what it means to be overdrawn, amounts of overdraft fees and service fees, as well as how to access all their account information. 
Understanding Wants vs. Needs- Ideally, this is something that’s been introduced before young people are out on their own for the first time. Like budgeting, it’s simple concept, but not necessarily an easy one to master. At its most basic, needs are the things that allow us to sustain day-to-day life and the bills we have to pay. Everything else is a want, whether we think we need it or not. When money’s tight, wants have to wait. 
The Importance of Saving for Emergencies- No one expects a newly minted adult to have a fully funded emergency savings account ready to go, but it’s important they understand why it’s necessary and start setting money aside. Stress the fact that money saved is used for true emergencies only, such as job loss, major car repair, or unexpected medical bills. 
How to Develop a Positive Credit History- Now is the time for young adults to start building good credit so they can meet future goals, such as home ownership. Unfortunately, mistakes made today such as getting in too deep with credit car debt, can set them on the wrong path for the future. The most important takeawy is understanding that all bills need to be paid on time, everytime. 
Understanding Nothing is Guaranteed- It’s one of the harsher realities of life, but important to understand that just because you have a job one day, doesn’t mean you will the next. Or that the best friend you chose to live with never has their share of the rent ontime. Preparing young people for these realities will help lessen the impact when unfortunate things happen. 
Knowing When to Ask for Help- Young adults are going to make financial mistakes, and some will be bigger than others. It’s important they understand help is available to get them back on track when that happens 0 such as credit counseling and student loan counseling. 

Trump Promises to Create 25 Million Jobs with his Economic Plan

 

Donald Trump announced his economic plan recently, declaring in a speech at the new York Economic Club that it would deliver a jolt to the economy and create 25 million new jobs over the next decade. 
“Over the next 10 years, our economic team estimates that under our plan the economy will average 3.5 percent growth and create a total of 25 million new jobs. You can visit our website, just look at the math, it works,” Turmp told his lunchtime audiancce. 
The plan would result in a $4.4 trillion tax cut scored as $2.6 trillion “under dynamic growth models, which is how taxes should be scored. The economic growth, Trump continued, would provide for his campaign’s other proposals, including the childcare plan championed by daughter Ivanka. 
Turmp did not cite independent analysis validating his growth projections, but he was nonetheless confident: “It will be amazing to watch,” he said. “You watch, it’ll happen.”
“It will be deficit neutral,” the Republican nominee added. “If we reach 4 percent growth, it will reduce the deficit, it will be accomplished through a complete overhaul of our tax, regulatory, energy and trade policies.”
Trump acknowledged that most economists disagree that 4 percent growth is achievable in an economy slowed by a number of factors including increased automation, an aging workforce and low-wage competition overseas, but presented his proposal as a more optimistic way to look at the economy.
“My economic plan rejects the cynicism that says our labor force will keep declining, that our jobs will keep leaving, and that our economy can never grow as it did once before,” he said. 
Turmp’s policy prescriptions have faced harsh criticism, particularly as a Republican who has broken with conservative orthodoxy on international trade deals and social programs like the childcare proposal, in particular. His campaign manager Kellyanne Conway has defended Trump against Clinton, saying on multiple occasions since her promotion that the businessman  campaign is more focused on policy than his opponent, despite Clinton having released her policy platforms months ago. 
The Democratic national Committee mocked Trump’s decision to deliver the speech on the eight-year anniversary of Wall Street firm Lehman Brothers filing for bankruptcy, making reference to Trump’s 2006 remark in which the businessman said he was “sort of” hoping for a crash in the housing market “because then people like me would go in and buy.”
“Donald Trump couldn’t have picked a better day to talk about his economic agenda – the anniversary of the financial crisis,” DNC General Election Chief of Staff Brandon Davis said in a statement. “After Lehman Brothers collapsed in 2008, the economy plunged into the largest recession since the Great Depression and millions of Americans lost their homes and retirement savings. Donald Trump? He rooted for the collapse of the housing market in 2006 – and he got his wish.”
The tax plan, the cost of which remains unclear, would exempt millions of low income Americans while promising no cuts to spending on Social Security, Medicare and Medicaid. Defense spending would also be exempt from cuts, Trump emphasized. 
“Our economic team has further modeled that the growth induced savings from trade, energy and regulation reform will shave at least another $1.8 trillion off of the remaining debt. That leaves around $800 billion,” Trump continued. “This money can all be saved through simple commonsense reforms. If we just save one penny of each federal dollar spent on non-defense and non-entitlement programs, we can save almost $1 trillion over the next decade. One penny. We can all do that. Save over $1trillion.”
Trump repeated, “Again, this is spending that does not touch defense. Because we have to build up our military which is so terribly depleted. And that does not touch entitlements.”
Addressing in a subsequent Q&A whether he would consider any scenario where he would default on the debt, Trump said “No,” while adding that he would consider buying back some debt. House Republicans have threatened defaulting on the debt as a means of extracting policy concessions. 
I love buying back debt, I love negotiating debt,” he said. “The debt of this country is absolutely sacred, absolutely 100 percent sacred.”
Trump offered new deals on how he intends to bring down the cost of his tax-reform-plan, as well as additional benefits he’d direct to lower- and middle- class Americans. 
In what amounts to the third major revision of his tax-reform plan, Trump proposed a number of new ways to subsidize child care including a new deduction fro those expenses. He said he would expand the earned income tax credit, a wage supplement for the working poor, and create a so-called “depended care savings account”. All taxpayers would be eligible for those accounts, Trump said, but the government would match the first 50 percent of the contributions of low-income families up to $1,000.
Those changes though would partially offset by other revisions to his previous plan that would have benefited those further down the income ladder. First, Trump is backing off his plan to dramatically expand the standard deduction, which is the flat amount Americans can deduct form their taxes. While he originally proposed nearly quadrupling it to $50,000 for couples, which would take tens of millions of low-income people off the income-tax tolls, Trump now says he’d settle for $30,000. He’d also end personal exemptions, which help subsidize child rearing costs, as well as the head-of-household filing status.
Trump also proposed new ways of dunning the wealthy, including limiting the amount of capital gains the wealthy could pass onto their heirs tax-free. He’d also limit their deductions to $200,000 per couple.e 
Those revisions come in response to complaints that Trump’s original tax plan, offered last September, would have cost a whopping $10 trillion with independent assessments showing the wealthy being the biggest winners. 
Trump said his plan now would cost $4 trillion, and $2.6 trillion under “dynamic scoring” – a budget analysis that assumes some cost of tax cuts will be offset by subsequent economic growth. Trump also said the middle class will emerge the biggest winner of his plan. 
“The tax relief will be concentrated on the working and middle-class taxpayer,” he said. “They will receive the biggest benefit – it won’t even be close.”
Both the Tax Policy Center and the Tax Foundation, two Washington think tanks that produce independent assessments of the candidates’ tax plans, said they would soon have cost estimates of the plan. The Tax Foundation said it would produce its estimate by Friday. 
At other points in his speech, Trump reaffirmed past stated positions, including his vows to ensure that China – “and I like China; they’re my tenant, they buy condos all the time; they’re just fine” – is labeled a currency manipulator and to keep the U.S. out of the Trans-Pacific Partnership “unless we can do something that phenomenal and I’m not seeing it right now, I can tell you that, I’m not seeing it.”
Of China, Trump added, “they are a manipulator, grand master level.”
Remarking upon the people who would benefit from his plan, Trump said that he has met workers who are “making less money today than they made 18 years ago in real wages.”
“They’re working much harder, often times because of the disatrous Obamacare we’re going to repeal and replace. Oftentimes they’re working two jobs. So they’re working harder. They’re older. And they’re making less. It’s like me. I’m working harder than I ever worked also. But these are minor – nobody cares about that. That’s Ok,” Trump cracked, to laughter in the audience.” Who cares about that.”