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Saint Patrick's Day is celebrated on March 17. This is a religious feast day Although North America is home to the largest festivities, many people of all backgrounds now celebrate St. Patrick's Day. It has been celebrated in locations as far away as Japan, Singapore, and Russia. Ireland has only allowed pubs to be open on St. Patrick’s Day since 1995. Now the tourists pour into Dublin for the fun. Catch THAT Leprechaun With money as the core of our modern society, it is no wonder “luck” to come our way. Perhaps you will receive a windfall from the lottery, an inheritance, or a bonus from your job. What we do with our windfall is directly related to how we view money. Would you view it as security? Or would you just view it as something to spend? Our attitudes towards money can greatly direct our lives. Ask yourself what your attitude is. Can you stand back and view money as a tool to use for the betterment of your life and your family’s security? The 4-leaf clover is believed to be good luck. It is derived from the teaching’s of Saint Patrick who explained the Trinity by using the 3-leaf shamrock. He used it to illustrate the Father, Son, and the Holy Ghost. Now it is universally accepted as Hope, Faith, Love, and Luck as the fourth leaf. Although this holiday is surrounded with magic, riches, and lore, if we look close enough, we may find some meaning within. As man looks for his treasure, he finds that his faith, and all that it brings, is the true treasure at the end of the rainbow.
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So you think you have made cuts in your budget? Found ways to save on your groceries? How frugal can you be? It’s hard sometimes to see ourselves within our routines. How do you handle your everyday tasks? Take our Budget Boosters Quiz and see if you can re-evaluate some of the things you do regularly.
How do you handle your mornings?
A. Everyone is in a rush and gets $5 to stop for a fast food breakfast. (What is the cost per day?)
B. We plan the night before and pack lunches and snacks. We get up early enough to make breakfast at home.
Are you aware of your energy costs?
A. I come home, turn all of the lights on, turn on the TV, and go make dinner.
B. I go to the kitchen and make dinner. After dinner, I make my way to the living room and relax while watching TV.
House rule, if you’re not in the room, the lights are off.
Does everyone in your household have a responsible attitude towards money?
A. The kids are constantly asking for cash.
B. The kids use their allowance or gift money for special things on their wish list.
When was the last time you reviewed your creditor statements and bills?
A. I pile them up on the counter and look at them once a month.
B. I open them as soon as I receive them, review the charges and credits, and file them according to due date.
Do you waste food?
A. I have too much leftover food to throw away every week.
B. We eat leftovers at least twice a week. I don’t create another big meal until the leftovers are gone.
How do I travel?
A. I always drive, even if it’s to the Mini Mart, 1/2 a mile away, for a newspaper on Saturday.
B. I figure out where I need to drive and plan my route so I don’t backtrack.
How do you entertain guests?
A. I go all out! Beef Wellington, cheesecake, and plenty of refreshments for the guests.
B. I watch for food and drink items with special prices. I prepare everything from scratch.
How do you entertain your family?
A. We go out to eat and to a movie every week. If the kids get really bored, I take them shopping.
B. We rent a $3 movie and watch it with the whole family. Popcorn and soda for snacks is fine.
You can see where we are going with these questions. We can all think of alternatives with how we live and what we do with the finances available to us. You can “live well” without feeling like you are “living without”. If we “spend dollars when we make dimes” we will quickly find ourselves experiencing hard times. Be creative and find new ways to make your life more fulfilling and keep your family healthy, happy, and more financially secure. Stand back and look at the way you do things everyday. See if there are some changes you can make to improve your savings and your life.
Whether you are a “first timer” or a seasoned veteran of the financial world, there are things that all of us still need to learn about credit. New terms, programs, and companies are starting up everyday, and it can become overwhelming to try and keep track of it all. Fortunately, there are places and people to turn to for help. There are accountants, financial planners, investment planners, accredited or certified credit counselors, and the list goes on. All of these people can help you become more familiar with the financial world and guide you in the right direction. The following are items that everyone should be familiar with whether they are just beginning to enter or are already established in the credit world.
TYPES OF DEBT/LOANS
There are two basic types of debt: Unsecured Debt/Loans and Secured Debt/Loans. Unsecured debt/loans do not require any assets to secure the loan. Your word that you will pay back the money is the only thing that secures the money borrowed. Secured debt/loans have some form of property securing the money. So if you don’t pay back the money, whoever you obtained the loan from can come and take your property as payment.
There are two terms associated with borrowing money that everyone should be familiar with, smart borrowing and bad borrowing. Smart borrowing involves borrowing money for items that are too large to save for - home, car, or education. These are all acceptable items to borrow money for. Bad borrowing involves borrowing money to take a vacation, bail someone out of a financial hardship, clothes, or any other material item. These are not essential items to borrow money for. You may have big problems down the road if you do not borrow wisely now!
GENERAL LOANS
If you have decided to apply for a loan always shop around for the best interest rate. They will vary from lender to lender and will also depend on your past credit history. The best place to start is your local bank or credit union that you have already had some type of an account with. Even if it was just a checking or savings account, you have already built some type of a history with that institution. If it was a positive history, they will be more likely to loan you money based on their positive experience with you then someplace that has had absolutely no history with you. If you belong to a credit union, they usually have very good rates for their customers since they are member owned.
If you do obtain a loan, make sure and keep all documents that you are given concerning the loan. Financial institutions by law are required to give you a full disclosure of all fees and charges associated with the loan. The documents will come in handy later if there is a question about a fee or a policy. The most important thing to remember when obtaining credit is to read all agreements and contracts BEFORE you sign them.
CAR LOANS
When you finance a car, the car becomes the collateral on the loan. If you stop making payments, they can repossess the car. These types of loans are usually for a specific amount of time, between 3 and 5 years. Make sure you read all of the fine print on the loan documents. There can be additional charges for the loan that will vary from place to place.
One tip when planning on purchasing a car, check out the
financing before you find the car. Many lenders can “pre-approve” you for a certain dollar amount first so you know what you can and can not afford before you start looking at vehicles.
MORTGAGE LOANS
Mortgage loans fit into the category of “smart borrowing” and the interest you pay on your mortgage loan is tax-deductible.
Mortgage Brokers are people who will help you find the best rate available for someone with your credit, but they will charge a fee for doing this. Good credit, they usually charge about 2%. Bad credit, they may charge up to 10%.
There are different types of mortgage loans so you need to find the best one for your situation. Three of the most popular are Conventional loans, Adjustable Rate loans, and VA or FHA loans. Conventional require a 20% down payment on the loan and the remaining amount is financed at a fixed interest rate. Adjustable loans have a varying interest rate tied to the government prime rate or treasury bills. Because of this, payments could go up or down. VA or FHA loans usually lend you more of the amount and require less of a down payment.
In each state there are different financing programs available for people who are first time home buyers or are low income buyers.
These do vary so it’s best to talk to a few different lenders to see what is available for your situation. Realtors usually can point you in the right direction also.
As you can see, there is alot of information to know when seeking a loan, so make sure you do your research before you sign on the dotted line!
Baby Boomers are fast approaching retirement age. Boomers are those born between 1946 and 1964 (ages
40 to 58). This was the largest growth of population in the history of the United States.
Many Boomers can hardly wait to retire and finally enjoy a leisurely life. How wonderful it will be to not have a schedule or punch a time clock. Boomers also seem to be quite aware that they may not have saved enough money to have a standard of living comparable to what they have today. As a group, Boomers will amass more wealth or income at retirement, than the two previous generations. Although their income will be higher than earlier generations, many Boomers plan to continue working into their 70’s. They believe they will need to supplement their income or will continue working for the health care benefits provided by their employer. Since the life expectancy age is increasing and people are planning on working more years then previously, the government has considered raising the retirement age.
Making more money doesn’t necessarily mean they are saving more for retirement. Boomers are pulled from two directions. Many people have parents that are in need of special care, and sometimes this means a financial contribution for that care. At the same time, children are tugging on the other end of the paycheck. With the high cost of education and with many children living longer at home, there isn’t much relief from the financial drain. How then, do Boomers save for that wonderful day they can walk away from the hustle and bustle of work and spend their time doing whatever they desire? There are many saving plans available and it can become confusing. Or we find it difficult to make a decision on what “plan of action” to take. Some workers have pension plans, but these are not as available as they used to be. Social Security will not be enough to sustain your current living condition. Most people are going to have to be responsible for their own savings to provide the additional income they will need.
The first question to answer is, How do you want to live when you retire? Does a house at the ocean, in the woods, or in a small community sound enticing? Or does traveling in an RV seem to be your style? Traveling will be the more expensive route to take. Like anything in life, figuring out what you want to do in life is the hard part. Once you know what your goals are, you can begin to plan.
The second question to ask yourself is, Am I saving enough now to meet my goal? On an average, people are living 20 years past retirement. It is said that
you will need about 70% of your pre-retirement income to maintain your current standard of living. This takes into account that you no longer have children needing your financial support and that you do not have a mortgage.
What are you doing now to plan for your retirement?
• Are you making contributions through your employer in a
401K plan?
• Do you have any IRA CDs?
• Do you have any Mutual Funds?
Are these load or no-load funds?
• Are there fees associated with any of your accounts and how have they preformed?
•What are your accounts earning?
The best saving plans are 401k accounts in which your employer matches your contributions. About 80% of employees that have this plan available, contribute between 5% and 6.6%. Many of these plans allow you to save up to 20% tax deferred. This also means 20% of the people who have this available to them don’t contribute at all. If you are one of these people, contact the Plan Administrator in charge of the 401k plan where you work. Even if you can only make a 5% contribution, it’s far better than nothing at all! Remember, this is money taken off the top, before taxes. It’s also easier to have the funds taken this way because it’s automatic, you don’t miss the money. Out of sight, out of mind. Pay yourself first!
Under certain hardships you can borrow against 401k accounts, although it’s not a good idea. You do have to pay them back and if you don’t, you will pay high tax penalties.
Check your investments annually and make adjustments if needed. Check your Social Security account annually. To request a statement, go to the SS website at, www.ssa.gov.
It’s important to thoroughly explore the options you have before deciding what to do with your retirement nest egg. Ask as many questions as you need to until you fully understand.
Saving for your retirement may seem an impossible task, but just a little money now could mean a big difference in your golden years. Perhaps you could give up one small luxury, like buying lunch everyday. You could enjoy it now or have more security later.
We need to start early when teaching our children how to be a financially responsible adult. Children who have the practice of saving and spending money responsibly will make better decisions as they gain experience. There is some controversy over whether or not to give a child an allowance. Keep in mind, the only way a child can learn to manage their money is through experience, trial, and error. The guidance you, as a parent, give them, is of the utmost importance. Children learn everything from trial and error and role models. If they don't learn as children, the price of adult mistakes can be great in terms of money. If you can help them develop good money habits early, there is less likelihood of future costly blunders. If you have decided to give your child or children allowances, here are some things to keep in mind.
• Determine how much money you usually give them and what they have to do to receive it. This will help you determine the amount. This varies with different age groups. Parents are usually surprised at how much they are spending on their children.
• How will the money be split?
What percentages should go for spending, saving, and giving?
• Make it a regular payday. Always be faithful and pay them at the same time and the same amount.
• Don’t sway from the plan! You wouldn’t like it if your employer didn’t pay you on your regular payday.
• Pay them in small denominations, one-dollar bills and change. These can be divided up easily.
• If you’re connecting the allowance to a household chore, stick to the program. Don’t let the kids get paid without doing their job.
• Remind the children how much money they have available and to take their money with them when they go shopping. If they see something they want and forgot their money, don’t give in. Unless they pay you back as soon as you get home.
• Never borrow money from your children. You are the role model!
Many teens are learning about banking and financial issues by joining a special “teen account” at their Bank or Credit Union. These are typically for ages 13–18. There are many benefits to these accounts. Not only does it teach the teen how to handle their own accounts, but gives them the tools to help establish a good credit history.
Parents need to give financial control of finances to the teen at some point. These accounts can help them learn about the mechanics of money and how lending works. The parents need to advise, but allow the teen to make their own decisions. That sometimes means letting them make the wrong ones. Hard lessons learned now can save them heartache in the future. With the correct coaching from you and the many other sources available, they can become savvy consumers and investors. Many of these special teen accounts offer such things as:
• Scholarship Programs
• 1st box of checks free
• EZ Check & ATM Card
• Loan Discounts
• VISA or MasterCard
• Special Saving Certificates
• Rewards, Giveaways, and Contests
• Quarterly Newsletters
• Activities & Seminars
With all the basics available to the teen and with proper guidance, these can be terrific tools for establishing their credit. With hands-on experience this can prepare them for their future financial decisions.
These accounts can also be
dangerous if used incorrectly! Parents must co-sign on accounts for minors. Monitoring and giving your teen guidance is the key to their success.
• Set limits
• Provide structure
• Allow the teen to take control
• Talk about finances
• Teach them the consequences
of debt
• Let them make their own
mistakes, but provide learning tools to help them understand this new world of finance
There is more information available at www.jumpstart.org.
Don't forget the APRIL 15th DEADLINE! It’s difficult to get yourself motivated, so gather all of your paperwork now, and fill out your forms. Or for some of us, finding the time to take your paperwork to a tax preparer is difficult. This deadline is fast approaching and you don’t want to be late. Remember, even if you can’t pay the full amount you owe to Uncle Sam, pay what you can! If you know you will be late, you may file for an extension. You also need to be cautious when filing your return. Here are some common errors:
• Make sure Social Security Numbers are correct
Double check your spouse’s SSN and your own.
• Required forms are not attached
W-2s, 1040, 1040a, etc.
• Tax Return is not signed or dated
Make sure your spouse signs your forms if needed.
• Incorrect filing status reported
If you were married in December 2004, file married, not single.
• Math errors
Make sure you put in the correct amounts, for example, wages of $27,532 instead of the correct amount of $27,523.
• Standard deduction is used when itemizing could save you money
Make sure you are taking all the credits available to you.
• Social Security taxable benefits worksheet is not complete
• Not claiming all credits
Child Tax Credit
Earned Income Credit
(figuring credits correctly)
• Omitting income items
Because you use your SSN on all of your investment accounts, the IRS knows what money you have made. Don’t forget about interest and dividends. If you omit this information, you could owe a penalty.
• Use the pre-printed label
If you use the label, you will receive your return quicker!
• Forgetting to claim charitable
contributions
Make sure you give to a qualified organization.
• Use the correct Tax Table
Are you positive you have paid the correct amount for your income range? Check the tables. Each status owes a different percentage.
• If you owe taxes, make sure you make the check out correctly!
Make sure you sign it!
• MAIL YOUR tax RETURN ON TIME!
Postmarked by April 15th
• Make sure you put the correct postage on your return
If you put the wrong amount on your return, your post office will send it back to you and not to Uncle Sam. This will make it late if you waited until the last minute. Be sure to give yourself enough time and enough postage.
Don’t underestimate the time that you have to meet this very important deadline.
If you are making an IRA contribution, make sure you have your Contribution Direction Form filled out and ready between the dates of January 1st and the deadline of April 15th. This will show which year you are making your contribution for, 2004 or 2005. See the chart to the right for allowable annual contributions to an Individual Retirement Account. You may want to contribute to an IRA to counter-balance some taxes you may owe.
If you are contributing to a 401K plan you may be saving substantially more. If you are not and you have a 401K plan available, contact your Plan Administrator where you work. This money comes off the top before taxes. You can invest a little, without noticing a loss out of your paycheck.
Meeting a deadline can be difficult at times. If you are organized and keep all of your paperwork in one place, you will find that keeping the April 15th deadline can be a breeze. As you receive forms for your taxes, keep them in their own folder. You may want to write a list of all places you should receive forms from like your employers, banks, etc. Attach this to the outside of the folder and check them off as you receive them. All W2’s are to be post marked by Jan 31st. If you do not receive one, contact your employer and tell them you did not receive it. If you do not receive one within a reasonable amount of time, contact the IRS at 1-800-829-1040.
An inexpensive, accordion-type organizer works well to organize all of your regular monthly bills. Choose a specific day every week to look through your organizer and update all of your bills. You may want to keep them separated according to their due dates. This can assist you in keeping all of your important deadlines, not just the “April 15th” deadline!-
