Saturday, December 28, 2013

How to Create Your Financial Roadmap for 2014


Develop commitments for 2014 instead of making New Year’s resolutions. Many times resolutions are forgotten about after January 31st.  By making commitments you will be more determined to achieve these goals because they will be things you want to achieve and need to achieve.  These commitment are things you can do throughout the year to improve your life.  

You can create one or more commitments you want to achieve for 2014.  Ideally try to create at least five commitments you plan to achieve in 2014.  You can meet all of your commitments by creating smaller goals for each commitment.  Once you achieve those, develop larger goals and develop a course of action to achieve them. Track your progress.  I develop a roadmap each year that is broken down into 6 month increments. I develop goals and a deadline for each goal.  Later I develop a course of action on how to achieve those goals. If I don’t meet a goal I just extend the deadline and add it to the next 6 month increment.

Make sure your commitments and goals are positive statements that will improve your life. A commitment should be similar to an affirmation, i.e. I will pay off my Visa bill by April 2014 instead of an uncertain or negative goal such as, and I hope I can pay off my Visa bill by April 2014.

One of the worst habits Americans have is getting into debt year after year.  Make 2014 your year to eliminate those bad spending habits and begin your path to financial freedom. Here are 12 Financial Commitments for 2014 that will improve your financial life, reduce stress, end fights regarding finances, and bring peace to your life.

  1. Consult a professional.  Contact a financial advisor or financial planner to help you determine your financial goals, where you want to live, the age you want to retire and the lifestyle you would like to have when you retire.
  2. Track. Track your spending for at least 14 days up to 30 days. Compare this with how much you earn, spend and owe.  Make adjustments the following month and rate yourself on the improvements you made. Continue to do this until you are able to effectively manage your finances. Pay with cash or your debit card instead of your credit card. 
  3. Bundle products. If you have multiple insurance products with different companies contact each company and get a quote for bundling your products. 
  4. Ask for discounts and specials. Companies always provide discounts or specials but do not always advertise them.  Every 3-6 months call each service provider and ask if they are offering any specials and what discounts they have available for the services you currently have.  Ask for competitor price matches.  
  5. Trim Spending. Buy needs more often than wants. Find ways to reduce expenses to help pay down your debts. Reduce spending by 30%. 
  6. Get insured. Make sure you have adequate health, auto, life, disability and long-term care insurance. Review policies and update your beneficiary information yearly. 
  7. Withholdings. Review your withholding status. Adjust as needed based on life events (death, divorce, birth of a child, adoption, new job, reduced benefits, new business venture, etc.) 
  8. Say no. Learn how to say no. Stop loaning money if you can’t afford. You cannot save the world. You must save yourself first. Even if you can afford it, the best way to help someone if to show them how to help themselves. Giving money only enables bad behavior.  
  9. Mindset. When spending money think about how it will affect your financial goals, your future, your family. If you buy a new pair of shoes that costs $200 how will that affect your family budget next week. Do this every time you spend money. This will help you to see how your spending impacts others. 
  10. Debt. Pay down debt. Get current on any late payments. Negotiate with creditors to setup or settle accounts. Pay more than the minimum monthly payment to pay down debt faster.  
  11. Risks. Avoid risky financial products such as payday loans, cash advances, advance credit or other risky financial products. These products cause you to owe more money than you originally did and make your financial situation worse. 
  12. Credit History. Order a copy of your credit report to check for any errors and unknown accounts that you owe. Fix any errors and setup payment plans for past due accounts. 

Tuesday, December 24, 2013

How to Save Money While Having Fun This Holiday Season

Many friends and relatives are coming in town for the holidays or you may be traveling out of town to visit friends or relatives. This can be costly.  Avoid peer pressure from your friends and family to spend money or do things you don’t want to do.  If your friends have bad spending habits, it’s easier for you to spend money.  It can be difficult to resist the urge to join them. However, you can have fun without going broke.  

Resist the temptation to spend money that you don’t have. It is easy to forget about how much money you are spending when you are having fun.  When your monthly statement arrives you quickly forget about how much fun you had. Pay for everything with cash. It is easier to go over budget when paying with a debit card or credit card and increases your chances of identity theft. Here are some practical tips on how to save money during this last holiday season of the year.

Eating Out
  1. Ask. Ask about specials and promotions.
  2. Meals. Order a kid’s meal or share a meal with your children.
  3. Desert. Avoid buying deserts or share one desert with others.
  4. Drinks. Avoid buying alcohol at restaurants which is more expensive. Buy refillable drinks such as tea.
  5. Discounts. Use coupons, gift certificate, gift cards or vouchers to save money at restaurants or other venues.
  6. Compare. Search for coupons or discounts on sites like Groupon or Living Social.
  7. Eat less. Don’t eat until you are full. Try to eat less and order two or three appetizers that cost less than the price of a meal
  8. Appetizers. Eat an appetizer instead of an entree.
  9. Lunch. It is cheaper to eat lunch than dinner. Many restaurants offer the same portions as dinner. Eat leftovers for dinner.
  10. Share. Share a meal with a friend or relative.
  11. Timing. Eat at the bar, some restaurants offer cheaper prices.  
  12. Bulk. Eat at buffet restaurants that offer several food options for a low price.

  1. Cruises. Bring bottled water, soda and alcohol with you and stash in your room.
  2. Home. Drink at home before going out to reduce the number of drinks you buy.
  3. Tab. Avoid starting a tab, this makes it easier to spend more money on drinks. Buy one drink at a time.
  4. Bars. Avoid going to bars that require a cover charge.
  5. Bulk. Buy a pitcher of wine or beer instead of individual glasses or shots. Avoid buying rounds.
  6. House. Order the house wine or alcohol. Buy beer on tap to save money.
  7. Location. Avoid sitting at the bar this makes it easier to continue to buy drinks.
  8. Skip driving. Skip driving if the places you go have limited parking. Consider using a car sharing service like Uber, catch a cab or use public transportation.
  9. Prep. Plan what you will do prior to going out, eat dinner, have drinks, play games, or visit people. Then plan what you will do when you are out.
  10. Sign up. If you need to be added to a guest list register even if they are not sure if are attending. This saves time and hassle when going to a venue.
  11. Local. Scan local newspapers, websites of your Chamber of Commerce to find free or low-cost fun events.
  12. Internet. Search social media and membership websites such as AAA for local events.

Friday, December 20, 2013

16 End of Year Financial Tips


Many people have made a list of New Year’s Resolutions. I hope that one of your resolutions or goals for 2014 is to improve your finances even if you are good with managing your money. The key to growing and becoming better at anything you do is to continue to improve.  Finances are a monumental part of your life.  Finances can destroy relationships; result in divorce, arguments, sadness, depression, anxiety, fear, health issues and unemployment. Finances must be properly managed which requires eradicating bad spending habits and constantly practicing good spending habits no matter how much you earn or think you know.  This is always something you can do even better. 

Make a promise to yourself that you will do at least one thing to become better at managing your finances in 2013. A financial goal should be a positive statement, i.e. I will pay off my Visa bill by March 2014 or I will save $10,000 by December 31, 2014. Here are 16 end of the year financial tips to improve your finances in 2014 which will help you save money, improve for your retirement goals, get organized, and reduce stress and give you peace of mind and plan for the year ahead. 

  1. Automate. Pay bills online to prevent late payments, late fees and damage to your credit. Setup automatic withdrawals to contribute to a savings account.
  2. Combine. Combine insurance policies with one company to save money and receive discounts and specials.
  3. Banking. Use direct deposit for paychecks. Open a checking account with overdraft protection to save on bank fees. Use in-network ATMs.
  4. Cell Phone. Get a basic plan with basic features.  Comparison shop to see what company provides the best value for your money. Ask about discounts and specials.  Some discounts are provided through employers and certain organization memberships. Call every 3 – 6 months to find out about discounts and specials.
  5. Discounts. Use membership discounts. Many insurance companies, credit card companies or membership clubs offer discounts such as AAA, Amazon Prime, Diners Club, American Express, etc. that many people are not aware of. Call and ask about discounts and start using them.
  6. Personal Care. Go to a training school for services: go to a beauty school, barber school, dental school or veterinary school to save money on hair care, dental care and pet care costs.
  7. Get a roommate.  Rent out a room in your home or apartment.  Sleep in the basement or on a couch to rent out a room if you only have one bedroom.  Use the extra money to pay down debt or create a savings account.
  8. Skip the pampering.  Skip the hairdresser and barber or reduce visits by half each month.  Skip the spa or nail salon for those facials, manicures and pedicures. Try doing them yourself to save money.
  9. Pay yourself first. Save on a regular basis. Saving a certain amount of money on a regular basis either daily, weekly, bi-weekly or monthly. 
  10. Employer Match.  If your employer offers a matching 401(k) contribution, save at least enough to capture the match.
  11. Investment fees. Find out how much you are paying in investment or retirement plan fees. If you are paying more than 0.50 percent in expenses you are paying too much.
  12. Prescriptions. Buy a 3 month supply of prescriptions, buy generic or buy online. Ask about discounts, specials and less inexpensive versions of the same prescription
  13. Rewards Cards. Sign up for loyalty cards at all stores where you shop including grocery stores, hotels, rental cars, drug stores and airlines.
  14. Kitchen.  Use everything in your kitchen to make meals and use all items until nothing is left then go shopping.
  15. Cancel services. Cancel your cable, internet or cell phone service or get the cheapest plan possible. Use your cell phone to make long distance calls.
  16. Carpool. Carpool, use car sharing services or consider selling your car to save money.

Monday, December 16, 2013

How to Buy Your First Home

Are you thinking about buying your first home in 2014? It has been said repeatedly that this is one of the biggest financial decisions you will ever make. It’s both an exciting and nerve-racking time for perspective homeowners. Setting realistic expectations is a must; rarely do first time home buyers purchase their dream home. That may happen on the second or third purchase. 

The first step is to save! According the National Association of Realtors, 32% of all buyers cut spending on luxury or non-essential items. Twenty-six percent cut spending on entertainment, 20% cut spending on clothes and 13% canceled vacation plans. The NAR also reported that first-time buyers are most likely to make sacrifices. Combined savings and income will dictate how much home you can realistically afford.

Be willing to do the necessary research, and define your needs to help make the home buying process easier. Use tools on the web to preview homes, calculate monthly payments, find a Realtor in your area and research neighborhoods. Maybe spend the weekend attending open houses to get a better feel for what’s available on the market. Evaluate your "must have's" and your "nice to have's." Are you buying a single family home or condo? What neighborhoods are high on your list? How many bedrooms do you want; what other features must it have? Schools are very important if you have children, or are planning to start a family. 

When you decide that the timing is right to enter the real estate market, finding a good Realtor is an important part of your overall success. A good agent will help you match those features that you desire with the available inventory. As a new homebuyer, you may qualify for one of several down-payment and purchase assistance programs, so talk to your Realtor about those options.

Next, talk to a lender to get pre-approved! This is critical in a competitive market, where many sellers see multiple offers in a short period of time. Traditionally first time home buyers are asked to put down 20%, this is not always feasible in major metropolitan areas where average homes may start at $400,000 to $500,000. Thankfully many mortgage lenders offer a variety of products that allow homebuyers to qualify with smaller down payments. Important note: Between pre-approval and closing, don't make any large purchases or apply for new credit, this will affect your credit score which may in turn jeopardize your loan!

In order to find just the right home for you, your Realtor may show you anywhere from 10 to 30 homes over the course of several weeks, and you could end up making several offers. Don’t get discouraged, because you are one step closer to realizing your dream. Remember, your Realtor is your best friend in this process because he or she will guide your offer strategy, help you get through the inspections, walk through and ultimately closing. 

Buying a home can be overwhelming at times, but keep in mind your long-range goal which is to be a homeowner. When you understand the process, you will be rewarded with the security that comes from having an appreciating asset that you can also call home!

This was a guest Post by Jason Wrenn.
Jason C. Wrenn, Realtor®
Central Properties, LLC
202-247-7513 (C)
202-232-0600 (O)