How to Protect Your Money From the New Tax Code

Many people know they should track their spending and create a budget or spending plan but don’t want to.  The thought of knowing how much money you actually owe, how much money you earn and how much money you actually spend each month is terrifying.  If you create a budget you will quickly see how you spend your money.  You won’t be able to hide it or run from it any longer.  If you know, other people may know too, yes those other people are your creditors who continue to call asking for a payment. Learn more at http://tiny.cc/kbnmpy

Many people are fearful of creating a budget and have good intentions by creating one but don’t stick to it.  To stick to creating a budget you have to view a budget as a tool to help you.  You are the only one who has to see your budget.  Many people today live paycheck to paycheck and are in mounds of debt, in some cases because they didn’t create a budget or didn’t stick to it.

If you know how much you earn, how much money you owe and how much money you spend you can change the direction of your life.  A budget helps you if you have an unexpected expense and when an economic change occurs such as tax code change. In 2017 the country experienced several fires, hurricanes, floods and earthquakes some in areas that were not expected.  If you did not have homeowner’s insurance to cover the damages that is example of unexpected expense. 

Create a budget by writing down everything you spend money on each week or during each month and subtract your income.  If the result is less than 10% of your monthly income you need to make some adjustments to your spending.  A balanced budget consists of: 15% transportation, 15% debt, 10% savings, 35% housing and 25% other expenses. 

Create an emergency fund to cover your total monthly expenses for 9-12 months.  Creating a budget will help you to reduce spending and prevent you from using credit cards to pay for purchases.  Use credit cards for emergencies only.

Develop financial goals when creating your budget. Financial goals provide motivation for you to work towards reaching that goal and provides a sense of accomplishment when the goal is met. Some examples of financial goals are: pay off a credit card, buy a home, start a business, take a vacation, etc.  Here are 6 ways to create a budget and stick to it.

1. Take accountability. Take accountability for your actions, don’t blame others for your current situation.  Learn how to be flexible and adjust to changes in your life.
2. Use pen and paper, use a software tool like Quicken or Microsoft Money or use the envelope method.  Once you visually see where you are spending your money it will make it easier to reduce spending.
3. Create goals. Write down a list of at least 5 financial goals. If you cannot achieve any or can only achieve 1 or 2 of your financial goals you need to make some changes in your spending habits. Write down a list of all of your debts.  Develop an action plan and beside each debt write down steps on how you can pay the debt off: reduce spending, use coupons, use money savings tips, earn extra income, etc.
4. Pay off small bills first. Pay down any small bills and debt first.  Once all your small bills have been paid off start tackling the larger bills. Setup payment plans for bills you cannot pay off in full. Be sure the account balances are updated on your credit report.
5. Support network. Surround yourself with at least three people who are doing better financially and gain financial advice from them.
6. Seek professional help. Consult a financial coach, financial planner or advisor to help you create a budget or spending plan and provide recommendations to help you stay on track.

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9 Ways to Protect Your Money

Whether you retire, get an inheritance, get a bonus, life insurance proceeds, get proceeds from a divorce settlement or win the lottery, have children, siblings or work a 9-5 you need to protect your money. Basically, no matter how much money you have you need to protect it.

It is important to protect your money because it provides many benefits: provides security for you, your family and your heirs; makes funeral preparations easier, reduces tax liability, prevents the government from taking you to probate court and reduces estate taxes.  

Life is full of surprises but minimize surprises to your family by protecting your money and making your wishes known.  Here are some instances when you need to protect your money:  if you own a business, if you are single, if you have children, if you get married, if your spouse has a lot of debt or bad spending habits or if you get divorced or are planning a divorce.  Here are 9 ways to protect your money.

1. Get a prenup.  If you have things of value or are concerned if you get divorced your spouse will get half of your assets consider getting a prenup.
2. Stay informed.  Call your mortgage company to find out what would happen if the business went under and what are your options. Develop a plan to protect your mortgage.
3. Diversify. Make sure your bank is FDIC insured. If not, move your money to a bank that is. If you have more than $100,000 in your bank, split the account into multiple accounts.  Open additional accounts at others banks and keep the balances below $100,000.
4. Plan.  Consider buying a safe for your home or apartment and keeping some money in your safe in the event your bank goes bankrupt and you need to access money quickly.
5. Insurance. Buy auto, health, homeowners, life, disability and long-term care insurance. At a minimum have adequate auto, health, homeowners and life insurance.
6. Backup. Make copies of all of your financial statements, bank cards and legal paperwork and store in a waterproof fire proof safe in your home and store a second copy at a secure location away from your home.
7. Review. Review paperwork yearly to ensure beneficiary information is up-to-date.  Add statements in the will and/or trust in the event an unexpected death to ensure your wishes are included in all legal documents.
8. Estate Planning. Create a will, living trust, tax deferred investments, etc. to protect your money and reduce tax liability.
9. Know the laws. Know the laws in your state regarding estates and protect your money.

IndyMac Closing - How Does This Affect You

On Friday, July 11, 2008 one of the largest banks in the county IndyMac, sadly closed its door. Customers were turned away and forced to wait until Monday to make their transactions. This is the second largest failure of a financial institution. On July 14, 2008, the bank will be taken over by the FDIC. Customers who have $100,000 or less in the bank will be able to get their money bank. Customers who have more may only get a portion of their money bank. This action brings more light to the economic crisis our country is experiencing. Take heed to this and start changing your spending habits and develop a plan to protect yourself. Here are 6 ways to protect your money.

1. Research. Look at the bank or mortgage company's financial history for the past five years. If the company revenue has been steadily declining you might want to consider switching companies.

2. Negotiate. Call your bank or mortgage company to find out what would happen if the business went under and what are your options. Develop a plan to protect yourself.

3. Diversify. Make sure your bank is FDIC insured. If not, move your money to a bank that is. If you have more than $100,000 in your bank, split the account into multiple accounts. Open additional accounts at others banks to keep the balance below $100,000.

4. Plan. Consider buying a safe for your home or apartment and keeping some money in your safe in the event your bank closes and you need to access money quickly.

5. Protect. Pay bills on time or before time. Don't wait until the last minute to pay a bill because with this economy you never know what may happen and you increase the chance that you may be charged a late fee.

6. Deposit. Perform bank transactions early in the morning. This ensures your deposit will be applied the same day. Don't wait until the last minute to make transactions, this increases the chance that your transaction may not be applied to your account the same day and may cause a check to bounce.