Category Archives: Financial Advice

10 Ways Too Many People Throw Money Away

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Packs of dollar in the garbage can. Waste of money or currency collapse concept. 3d

There are all sorts of ways to cut spending and boost your savings, and there are just as many ways to sabotage your own finances. In addition to missing out on money-saving discounts, making unwise shopping decisions, and purchasing unnecessary items, you might also be throwing your money down the drain without even realizing.  Keep reading to ensure this doesn’t happen to you!

1. Never redeeming gift cards.

Even if you don’t want your gift card, at least give it to someone who will use it. According to statistics compiled by Gift Card Granny, more than $41 billion in gift cards went unused over a 6 year period. American households also average $300 in unused gift cards, and nearly half of recipients do not use the full value of the card. Don’t let dollars go down the drain!

2. Letting Groupons expire.

According to Yipit, roughly 15% of Groupons go unredeemed by the time the expiration date rolls around. Make a note of your daily deal coupon’s expiration date to ensure this doesn’t happen to you. And if your Groupon does expire, you may be able to contact the merchant directly to get some value from it.

3. Buying tickets and not showing up.

Purchasing tickets for a concert, sporting event, or other cultural activity often requires planning far in advance. But if you change your mind later or something comes up, you’ve already spent that money. These days people even buy movie tickets in advance online. If you can’t get a refund, you may be able to at least pass along your tickets to a friend. To make every dollar count, when possible it’s best to wait until you are certain to actually buy your tickets.

4. Paying late fees.

Even small late fees add up quickly. This can include everything from overdue library books, Redbox DVD rentals, or late payments on utilities. To avoid incurring late fees on your credit card, pay in advance of your due date, schedule automatic payment, or set a reminder for yourself. If you are hit with a late fee, call customer service and ask to have the charge waived. On your first offense many companies are willing to let the late fee go.

5. Paying bank fees.

It seems like every year big banks come up with new ways to nickel and dime their customers. Between minimum balances, fees for checking accounts, and ATM fees – these charges can add up. Avoid these unnecessary fees by joining a local credit union like First Financial! Credit unions typically offer free checking accounts and savings accounts with better interest rates.

6. Not returning unwanted goods.

It’s easy to let unwanted items or gifts just sit there in the closet, but with a little effort, you could be getting money back in your pocket. Even if you are past the return date, give it a try anyway. You may be able to at least get store credit. For online purchases, many retailers even cover the cost of shipping for returns. Some retailers will even take returns without a receipt.

7. Failing to ask for a refund.

Consumers who are dissatisfied with their service often don’t take the time to voice their concerns. The ones who do however, could end up with a full refund or at least a discount. If you have a bad experience, don’t be shy about speaking up. Even if you don’t get any money back, retailers and service providers should know when their customers aren’t satisfied.

8. Never disputing mistakes on a bill.

If you think your bill may be incorrect, it’s worth disputing the charges with the company. At most respectable businesses, the error will quickly be corrected. Unexpected medical bills are also a growing problem, and patients almost never file a complaint with a state agency. The Consumers Union online insurance complaint tool is a good place to start.

9. Forgetting to follow up on a rebate.

The sneaky thing about mail-in rebates is they are designed to be so complicated that consumers either forget to mail them in or do so incorrectly. More than $500 million in rebates go unfilled every year, often due to deceptive practices. The Wall Street Journal reported that about 40% of mail-in rebates go unredeemed or are filed incorrectly and denied. Think twice before getting involved in a rebate in the first place. If you are waiting on a rebate check from weeks or months ago, file a complaint with the Federal Trade Commission.

10. Not claiming money that’s yours.

Every year, unclaimed money is reported by the government, and rightful owners are encouraged to step forward and claim their funds. In 2013, states, federal agencies, and other organizations together reported $58 billion in unclaimed cash and benefits. This can include unclaimed IRS refunds, old bank accounts and stock holdings, unclaimed life insurance payouts, mortgage refunds, forgotten pension benefits, and more. Health insurance companies report forgotten funds as well. And if that money isn’t claimed, it gets turned over to the state.

The moral of the story – pay attention, follow up when necessary, and don’t throw good money away!

Emergency Savings – Here’s What You Really Need

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3D Illustration of a Piggy Bank and a Stethoscope

Costs related to an unexpected illness or accident can spiral. Here’s the truth about savings in America: We all talk a lot about how much we should be saving and spending, but the majority of us don’t save enough to pay for a surprise expense that must be covered immediately.

More than 60% of Americans don’t have enough money stashed away to pay for unforeseen expenses such as a $1,000 visit to the emergency room or a $500 fender-bender, according to a Bankrate.com study.

The same survey found that 82% of us keep household budgets — mostly with pen and paper or in our heads, but we look to outside help to pull us out of a financial crisis.

Staying afloat after a job loss.

We also seem to have a blind spot about how much emergency savings we actually need. Most financial experts will tell you to stockpile three to six months of paychecks in an interest-earning account like a money market that you can get your hands on without tax or early-withdrawal penalties. But what many unwittingly discovered after job layoffs in the depth of the recession was that three to six months of paychecks for emergency savings wasn’t nearly enough when unemployment lasted six to 12 months, sometimes even longer. It also matters if you’re single or if you’re part of a two-income household, and if you rent or if you own a condo rather than a house.

Cushioning the blow of surprise expenses.

Gauge your emergency savings needs not just on income — but on what you own and what replacement costs might be. How much would a replacement roof be? What about a new transmission in your car? How about a health emergency? It’s the most feared and pricey crisis Americans face and for good reason, since it’s the #1 cause of bankruptcy.

You should be allocating emergency savings into three tiers: minor emergencies, major emergencies and job-loss protection.

  • Minor emergencies

They’re what you’d expect: health-care deductibles and negligible car and home repairs. But be sure you are prepared to cope with multiple minor emergencies around the same time. For example, there could be a domino effect of emergencies, like a car crash could lead to a broken leg and an unexpected car insurance deductible as well as a healthcare deductible.

  • Major emergencies

The good news is that major emergencies don’t happen with the same regularity that minor ones do. A key premise here is that the cash you have on hand — a liquid asset, can be used for any major emergency. The caveat for those with health savings or flexible spending accounts is that those accounts can cover health costs but are hands off for other emergencies.

  • Job loss

In general, there’s a 10% probability that any one of us could lose their job in any given year, according to the Bureau of Labor Statistics. Those numbers, of course, are skewed during recessions and economic hiccups like we’ve seen in recent years. In these cases, according to the BLS, more than 10% of those who are jobless need more than a year to find employment.

Add that all up and the advice is to save enough to cope with a year of unemployment. That’s a tall order, but remember you don’t have to do it all in one year and it doesn’t necessarily mean a year’s worth of paychecks – but rather a year’s worth of expenses covered. Unemployment insurance is considered too. In two-income families, it’s unlikely that both people will lose their jobs during the same year, but they should be covered as if the higher income gets knocked out of the equation.

Hopefully you will never need to worry about most of the items on this list, but it’s always better to be financially prepared and plan ahead when you can!

12 Ideas to Help You Stick to Your Budget

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When cravings for pricey dinners out or new outfits hit, it can be hard to stick with your budgeting plan. Whether you’re trying to cut back on spending, or set aside major funds for a life goal like home ownership, it might be time to adopt some new money-savvy habits. These dozen ideas can help you become more disciplined about your spending.

1. Articulate your goals. 

For some people, there’s nothing more appealing than saving for a four-bedroom house with a white picket fence. Others dream of taking a trip around the world or purchasing a boat. Choosing your personal money goals makes it easier to work toward them. If you have a partner, then set aside some time to talk about your individual and joint goals to make sure you’re on the same page.

2. Create a spending plan.

Most people spend about 2/3 of their income on three essentials: food, housing, and transportation. Then there are debt payments, savings, household costs, and optional items like entertainment to consider. Create an annual budget by allocating spending goals for each category – and try to stick to it as best as you can.

3. Resist retailer advertisements.  

Stores are in the business of getting us to spend money, but if we know their tricks, we can better resist the temptation. Rewards cards, enticing smells (like cinnamon around the holidays) and short-term flash sales are a few techniques retailers use; being aware of them can make it easier to just say “no.”

4. Track your spending. ​

Keeping track of every expenditure over a two-week period can offer insight into unnecessary wastes, from restaurant meals to cab rides. You can use a pen and pencil or take advantage of free apps and online tools like Mint.com.

5. Negotiate prices. 

Prices are often a lot more negotiable than we think, even in department stores. If you’ve seen a lower price listed elsewhere, don’t hesitate to ask the store clerk if they can match it. The worst case scenario is getting a “no.”

6. Research big-ticket items online before visiting the store.

Product review sites, coupon code sites and online discount warehouses often provide information and insight into how (and where) to find the best deals. With the proliferation of free shipping codes, the lowest price is often online.

7. Don’t shy away from all debt.

While debt has earned a bad reputation in the wake of the subprime mortgage crisis, managing credit and even taking on some debt can be useful. Mortgages allow people to buy homes and student loans enable people to go to school. Evaluate your debt decisions by considering the pros and cons carefully.

8. Pay off high-interest rate debt quickly.

Credit card loans are among the highest interest rate debt around, averaging roughly 17%. Paying off credit cards as soon as possible can help reduce fees and interest rate charges that balloon over time.

9. Build a solid credit history. 

Lenders base their decisions on whether or not to loan consumers money, and at what rate – partially on their credit histories. That means consumers with a limited credit history (because they have few or no financial accounts) can have trouble taking on a mortgage. Pay bills on time, and be sure to have some accounts in your name.

10. Check your credit report.

Everyone is entitled to a free credit report once a year; you can get yours at annualcreditreport.com. Reviewing it gives you the chance to fix any mistakes that could be hurting your credit score.

11. Review account statements.

An unfamiliar charge on a credit card is often the first sign of identity theft. Review all mail from financial institutions carefully to make sure your accounts aren’t being misused. If you see an erroneous charge, contact your financial institution immediately.

12. Choose the best credit card for you.  

Credit card benefits vary widely. If you tend to carry a balance, it pays to find the card with the lowest interest rate possible. If you’re a frequent traveler, you might want an airline card or a card that comes with travel insurance. Comparison websites such as NerdWallet.com or CreditCards.com can help you find the best card for you.

Article Source: Kimberly Palmer for Money.USNews.com – http://money.usnews.com/money/personal-finance/articles/2015/06/16/12-ideas-to-help-you-stick-to-your-budget

 

7 Tips for Financial Spring Cleaning

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Metal Spike File With BillsSpring is not only a great time to spruce up your home and organize your closets, but it’s also an ideal time to clean up your finances too.

Sweep away winter bills.

Here’s a scary statistic: Consumer Reports estimates that 7% of all shoppers go into a new holiday season carrying debt from the previous one. And it’s costly.You certainly don’t want to continue making payments on your holiday purchases for another 9 months. Try to clear up this debt in the spring.

Polish your budget.

How are you doing so far now that the first quarter of the year has ended? Are you over budget or under budget? Do you even have a budget? If you’re close to your expectations – great, but if you’ve veered off track for any reason – perhaps because there’s been a job switch, you had a baby, bought a new house, or there’s been another life change – it’s time to re-evaluate the situation. Your budget will need to be refreshed to meet current needs as well as short and long-term savings goals.

Tidy up bad credit.

Have you been subject to high interest rates? Denied a loan altogether? Been unable to rent an apartment? If you’ve got bad credit, then you’re aware of these consequences. To improve your score, make your payments on time and avoid carrying large balances on your credit cards (keep your utilization rate — the amount you owe versus your total available credit — below 30%).

Purge clutter.

Now that you’ve filed your income taxes, shred statements, bills and other financial records and keep only the documents that are absolutely necessary. As a rule of thumb, you want to hang onto tax records and supporting documents for seven years, and it might be easiest to keep hard copies of those (even though the IRS is okay with digital copies). Definitely no need to hang onto paper records forever.

Dust off unwanted items.

To boost your savings goals or earn extra money to help pay down debt, sell your unwanted gift cards on a site like Gift Card Granny where you can get up to 95 cents on the dollar in return. There is also Thred Up – a site you can sell baby, kids and women’s clothing. Poshmark is another site (and free mobile app) where you can sell women’s clothing, shoes, and accessories. As for old electronics, consider Gazelle. You’ll get a fast quote, a free shipping label and quick payment once the item’s mailed in and inspected, and the payout is generous.

Clean up accounts.

Are there brokerage accounts that can be consolidated? Bank accounts you rarely — if ever — use that should be closed? Old retirement accounts from previous employers that should be rolled over? After years of bill paying online, do you have a huge list of creditors you have to scroll through every time you make a payment? Try to get all of these cleaned up and organized.

Straighten out spending.

We all know that the key to financial freedom is to spend less than you earn. However, given how easy it’s become to spend, and given the proliferation of ads, marketing schemes and various tactics that tempt us to buy more than we need, keeping spending in check is becoming increasingly challenging. It’s more important than ever that you control impulse shopping. How? Eliminate triggers such as browsing favorite online shops, heading to the mall after work to window shop, or buying something new when you’re feeling down to help boost your mood.

Happy spring financial cleaning!

Article Source: Vera Gibbons for Marketwatch, http://www.marketwatch.com/story/7-tips-for-financial-spring-cleaning-2015-03-12

 

 

The 4 Easiest Ways to Budget

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corruption conceptBudgeting strikes fear (or annoyance, or disgust) into the hearts of many people, because we tend to see budgeting as something that is tedious, complicated, and keeps us from having any fun. But budgeting doesn’t have to be a scary word. Here are four ways to make budgeting as easy and painless as possible.

1. Automate It

To make room for savings in your budget, pay yourself first. Set up automatic deductions from your checking to your savings account each pay period so you’re not tempted to spend money you’ve earmarked for your emergency fund or retirement goals.

To avoid late fees and having to keep track of numerous due dates, set up automatic payments for as many bills as you can. The amount due will be deducted straight from your bank account when it’s due, and you won’t need to worry about mailing anything out by a certain date – or paying for postage.

Remove the potential for human error as much as possible, and you’ll find budgeting is already a lot easier!

2. Use Budgeting Tools

You don’t have to go it alone, especially if you’re not mathematically or organizationally gifted.

There are tons of great programs and software out there that can help you create a budget, track your spending and identify areas for improvement. Some are free, and some require a purchase — but they’re all waiting to make budgeting a breeze.

Check out free websites like Mint, that let you view all your accounts at a glance, or use an old-school worksheet to help you track your spending. Whichever tool you choose, make sure it feels intuitive and easy-to-use to you.

3. Adopt an 80/20 Budget

If the idea of tracking every purchase and reviewing your budget line-by-line makes you crazy, you may want to adopt an “anti-budget” or 80/20 budget.

Simply put, an 80/20 budget is where you put 20% of your income into savings automatically. This money becomes untouchable, and you have the other 80% available for the rest of your monthly expenses, such as groceries, utilities, and rent. If you find your monthly expenses go over 80%, then it’s time to trim some fat and find spending areas you can reduce.

You can also adjust the “anti-budget” to fit your own personal financial goals. If you’d like more savings to fall back on, try a 70/30 budget. If you want to aggressively pay down debt, you may want to consider a 60/40 (or even a 50/50) budget until you’re out of the hole.

4. Try the Envelope System

Another alternative is the envelope system, made famous by financial guru Dave Ramsey. If you’re a visual or tactile person, this could be the system that helps you finally see what budgeting looks like in action.

The envelope method involves taking all of the discretionary cash you have for the month and placing it in — you guessed it — envelopes that represent each of your budget categories.

If you can only afford to spend $300 a month on groceries, you place $300 in the “groceries” envelope. Being able to see how much cash you have left for the month helps you stretch out your spending, and if you use up what’s in the envelope before the month is over, you’re forced to make do with what you’ve already spent. (Maybe it’s time to get creative with leftovers, “shop your pantry,” or eat ramen noodles for the rest of the month).

If you’re the sort who tends to swipe a card and not really think about what you’re spending, the envelope system could be a great, old-fashioned way to get back to basics.

Did you know First Financial offers free budgeting seminars throughout the year?  Be sure to check our online event calendar to find out when the next one is, and register online.  Plus, when you attend – you’ll receive a computerized budgeting spreadsheet to use and easily plug in your expenses each month!

8 Things You Should Do With Your Money Before the New Year

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Checkbox 3DThe last thing we want to do right now while preparing for the upcoming holidays, is probably think about money. That’s what New Year’s resolutions are for, right? While it’s tempting to put off your finances until the New Year, you might miss some critical financial deadlines or lose the opportunity to save extra money. An end-of-year financial checklist gives you the opportunity to make changes and save before the clock strikes midnight on December 31st.

Here is a year-end financial planning checklist. Use these last few weeks to get your finances organized and under control — a great way to close out the year.

1. Look over your spending.

Ideally, you’ve been tracking your spending all year. What were your spending patterns? Did you go over or under in a certain category? Take a look at what you actually spent vs. what you had budgeted for. Do you need to change your expectations? Review your financial goals from last year and consider whether they will work for you in the coming year and make the necessary adjustments. If you paid off a loan, see if you can redirect that money into a paying off another debt or adding to a savings or retirement account. Don’t let the money get eaten up by miscellaneous expenses. If you don’t have a budget, start one now. Mint.com, Level and Check are all good free budgeting tools with features to help you create a budget from scratch, track your spending, and set financial goals.

2. Order your free credit report.

You’re entitled to one free yearly credit report from each of the three major credit reporting bureaus: Equifax, Experian, and TransUnion. Get a report now so you know where you stand before heading into the new year. Look over your report and check for errors or negative information. If your credit history could use some improvement, make this the year you get back on track.

3. Get your credit cards in check.

That means checking your balances, rates, and cash back or other rewards. Make a large payment if you are carrying debt and have extra money to do so. If you can’t pay down a chunk of the debt you accumulated this year, create a debt repayment plan that will get it down next year.

4. Make an extra mortgage payment.

Making just one extra mortgage payment each year can cut your loan down by years, saving you possibly thousands in interest. Also, making an extra mortgage payment means you may be able to claim an extra month of mortgage interest deductions this year. If you can’t afford an extra payment, try to make January’s payment before the first of the month. If the payment gets credited before January 1, it may still be tax-break eligible.

5. Review your insurance plans.

Look over your health, life, homeowner’s/renter’s, and car insurance plans. Do you need to adjust your coverage, premiums, or add any dependents? Do you need to purchase new coverage, like life insurance or disability? Did you get married, have a baby, or buy a house? Do you have any changes coming in the new year that you need to plan for? Those life events all trigger insurance changes.

PS: If you answered yes to any of those questions, you might need to make changes to your W-2, too.

6. Automate everything.

It’s time to finally automate your bills and savings. The more you can automate, the easier your finances will be. Automating helps you pay your bills on time and maintain a regular savings plan. This is also a good time to cancel any automatic subscriptions you aren’t using: video and music streaming, magazines, premium subscriptions, etc.

7. Make a tax-deductible charitable contribution.

If you are going to itemize deductions on your tax return, consider making a charitable contribution to a cause you believe in. The donation must be made to a qualifying organization and the tax benefit only saves you a fraction of what you donate, but you’ll be supporting a good cause to end the year.

8. Use your Flexible Savings Account.

If you have a Flexible Spending Account for healthcare or other qualifying expenses, now is the time to submit any outstanding claims. This is also the perfect time to make any year-end doctor appointments.

If you get your finances in order at the end of the year, it can only help you get more organized for the coming one!

Don’t forget to stop in to have your annual financial checkup before the year ends, or to kick off the beginning of the new year! Here at First Financial, we encourage our members to come in at least once a year to sit down with a representative at any one of our branches to make sure you are currently placed in the correct Rewards First tier for you, and also that you are receiving the best value, products and services based on your financial situation. Give us a call at 732.312.1500 or stop in to see us today!