Are you in the market for a financial planner? Turns out that there are numerous kinds to choose from and even with current laws stating that they must do what is in your best interest, that’s not always what happens. Before you sign on the line, read this detailed article from the New York Times. Before You Pay for Financial Advice, Read This Guide. It offers links to further information and even a fiduciary pledge.
College is not always the first thing that comes to mind when you are preparing to have a baby. But it’s amazing how fast the years go as your child grows, and how just a little preparation can ease any transition in your life. Today is 529 College Savings Day, in Texas. Click Here to find out more about the plans Texas offers and take a step toward your child’s future!
Do you know at what age you will become eligible for medicare? What is your sign-up window, and can you defer enrollment if you are still working and covered by an employer insurance plan? Turns out, knowing these answers is very important and may save you a good deal of money in the long run.
Yes, you. We all should. Some expressions: failure to plan is planning to fail or without a goal, wherever you end up is your goal.
My favorite budget guidelines have always been Larry Burketts, Money Matters , financial planning guidebooks. In the referenced tribute to Larry, his philosophy of money is reflected:
One of the central principles Larry taught is that we don’t really own things; we are simply stewards and managers of what God has entrusted to us.
There are many budget preparation guidelines, but I’ve always liked the ones provided by what is now Crown Financial Ministries. Here is a link to Crown’s Suggested Percentage Guidelines for a Family of 4 (High Housing Cost Areas) (since I live in Austin!). There are also guidelines for singles, single parent, couples, etc.
Important to note is that these budget guidelines start with gross income so that a tithe comes off of gross. No funny business about giving on net or gross. I’ve heard other financial planners say that wherever you give your money, if you can’t live on 90% of your income, you have a problem.
The next reduction is for taxes. If you are an employee, you can use the amount withheld for taxes from your paycheck. Be careful not to have too much income tax withheld. It’s better to pay a $1 than to let Uncle keep your money for up to 16 months! If you are self-employed, you can look at the total tax paid on your prior year return. Taxpayers think that they are saving money, but in fact, saving a little money each month in a savings account generates more savings than the “income tax withheld” savings account. The tendency is to spend that tax refund impulsively rather than putting it into savings for planned spending.
After the reductions for both giving and taxes, then you compute your budget percentages. Your budget is based on your spendable income.
As you complete your budget, remember that many employees have additional reductions in their pay that need to be considered as you budget: health insurance premiums, 401(K) contributions, day care tuition, etc.
I started a 30-Day Diary to really check in with how I spend money on a daily basis. My dad (the first Newby CPA) used to keep a notebook in which he recorded all cash expenditures for the day. What discipline! Join me in the goal of tracking out of pocket expenditures (so to speak!) for 30 days. Let me know how you do.
Michelle Singletary writes the nationally syndicated personal finance column, “The Color of Money,” which appears in The Post on Thursday and Sunday. Her award-winning column is also carried in more than 120 newspapers. Her third book, “The Power To Prosper,” is scheduled to be released in January 2010. In her spare time, Singletary is the director of a ministry she founded at her church, in which women and men volunteer to mentor others who are having financial challenges. She was recently selected to receive the Distinguished Alumni Award from The Johns Hopkins University.
See her column on a financial fast. Good words here.
On Marketplace; Tess Vigeland interviewed Bob Sullivan, who covers Internet scams and consumer fraud for MSNBC.com. Listen to the show or read the transcript and learn about offers by credit card companies to pay your balance if you are laid off, injured, or fired, and how expensive they can be.
With the attractive opportunity to receive up to $8000 from your fellow taxpayers if you are a first time home buyer or have not owned a home for three years, there are some important issues to consider before you buy a home:
Set realistic price guidelines:
Determine what size mortage payment will fit into your monthly budget. As a general rule, your monthly housing cost should not exceed 25 to 30 percent of your gross monthly income (before taxes). Monthly housing costs include your mortgage principal payment, interest payment, property taxes and home insurance.
Don’t forget the extras:
Remember the other expenses you’ll be paying each month. You may also need to pay for items such as moving expenses, new furniture, home appliances, and improvements and repairs. Ideally, you should include in the percentage given above an amount saved as a repair allowance.
Your credit situation:
Before starting your home search, evaluate your current credit situation and credit history. This allows you to take steps to repair your record before you apply for a mortgage.
Remember the tax advantages:
On your rearly tax return, you can deduct the interest you pay to buy, construct, or improve your principal residence. You can also deduct the real estate taxes you pay on your home.
Did you know?
The average american family spends $1.22 for every $1 earned. Get on the financial scales and determine your current financial situation. What do you own and what do you owe (your net worth)? How much money do you make and how do you spend it? How much of it is used for things you absolutely need, such as rent, insurance premiums and credit card payments (fixed expenses)? How much do you spend for pleasure, on things like a new cell phone, pet care, clothing or vacations (variable expenses)?
A free budgeting worksheet is available at www.ValueYourMoney.org.