Big Hairy Audacious Goal (BHAG)

I’ve actually written down a new goal that I’ve thought about for a while, and finally decided to tackle.  The only thing we still owe is our mortgage, which is now at below half of our home value.  While that’s great news, we are ready to attack the BHAG.  It seems overwhelming, and we “could” sell our investments, pay taxes (of course) on the gains, and pay off the mortgage today.  That would create less risk in our lives, but I don’t feel that’s the best way for us to do it.

It’s important to prioritize financial decisions.  Start investing early, with the goal of investing 15% of your income.  Somewhere along the way, we bought a home.  The payments should be less than 25% of your take home pay.   California has it a bit tougher, and we Californians have been known to stretch our payment to 1/3 of our take home pay, but that’s riskier to keep up with the bills and investments.  Once you start making more income, keep up with the 15% retirement investment, and start adding extra funds to pay down the mortgage principal. 

With the proposed tax reform, mortgage interest is not going to be as attractive as a write-off, since the standard deduction will most likely be the best bet for most Americans.  Interest rates are likely to go up this year, so refinancing will not be as appealing, either. 

If we add $700 a month to our payment, we could have the house paid off in seven years.  That would save us thousands of dollars.  My plan is to take any extra income and any savings earned to pay towards the principal.  So far in May, I’ve already saved $143 by catching a medical billing error on my co-payment, negotiating with my Internet Service Provider to not charge us equipment rental, and coupons I used.  It’s early in the month, and now that I’ve written down the goal, my actions will bring in more results.

Is anyone brave enough to make the same challenge?  What ways do you think you can engage to bring in more funds to pay down the principal?  How would it feel to not have a house payment anymore?  

Family Members and Money

 Why is it that we seem to be making some good choices and getting ahead financially, when along comes a family setback, and we’re reeling right along with them.  Are you the one who graduated from college and is doing better than the others, so you are the caretaker?  Are you the oldest child who takes responsibility for the others?  Did you fill your grandmother’s footsteps as rescue worker?

Let’s talk about boundaries.  Let’s outline some things that, regardless of your relationship and ability to pay, you should NEVER do.

• ·         NEVER co-sign on a car loan or other purchase
• ·         NEVER rent a home or rental property to a family member without a written and signed rental agreement
• ·         NEVER add other people to your wireless phone plan

So many times, we have a noble intent to help our sister, and they take that inch and a mile more.  If they can’t buy groceries for their young children, don’t give them grocery money.  Buy them food and bring it to their home.  If they can’t pay the electric bill, call 211 to find community resources that can help.  You may have offered money in the past, so build up your resolve to help them with information and moral support instead of money.  Teach them how to fish.  If they don’t want anything except money, let them find it elsewhere.

Santa Cruz, CA 1920's  My dad is the little guy standing up

I know this is easier said than done, but making them dependent on you does no one any favors.   They’ll never grow strong when there’s always someone to fix their problems.  I know this sounds harsh, and it may be something that a family has never seen before.  Maybe they won’t talk to you; that shows that all they really want is the money, so let them be mad for now.  Think how much more independent people would be if they learned by “tough love” instead of constant coddling.

If it’s your parents, it’s even tougher.  You probably acquired a lot of their struggles when growing up, and may have learned to treat your money differently.  Share with them some of your scuffles, and encourage them to try incremental changes that may make a big difference.

If your family relationships cause issues for yourself or your marriage, read the book “Boundaries” by Dr. Henry Cloud for some insight into understanding and addressing the concerns.  Seek advice from someone to help with your resolve to not give in.  Ask others for help to stick with your determination to not hurt yourself financially to dig someone out again.  

What Have You Been Missing?

Am I paranoid, or are they really trying to overcharge me?  In the past six months, we changed our ISP, entertainment, and phone service, saving us $150 each month.  I have had to call five months in a row because my bill was wrong – sometimes up to $200 in errors. 

I shopped our insurance rates, and it’s reassuring that we already have a company with the best rates and reliable service. Our homeowners’ insurance company had the wrong start date on the policy, and we were able to get it corrected and have two additional months of coverage.

We reduced one bill that provided redundant services and will save $240 a year, and I did find an error on our medical insurance bill dating back to August, and we are getting a refund for $200. 

All this is from reading the monthly statements for our bank, credit cards, cell phone carrier, and reviewing the insurance bills at renewal time.  Except for the phone service and insurance, I accomplished most of these savings in January.  Is there anything you have been missing on your statements?  How would you know?

I’ll admit that reading statements and bills is not very entertaining.  I’d rather be perusing travel brochures and planning our next escape.  That is my motivation for being vigilant about our money – I want to travel and experience new adventures as often as possible.  Our next trip keeps me inspired to save now and enjoy soon enough.

I’ve talked about this before, First Step to Control – Review Your Bills.  You don’t have to look at every detail on your 401K account, but make sure that your contributions are showing up right, and that the money is being invested the way you had it planned.  At least once a year, have a face to face appointment with your financial advisor to ensure your investments are doing what you need them to do.  Your goals may have changed, and you want to ensure your securities are still the best choice for you.

Starting today, read all the statements that you receive in the mail or e-mail for the next thirty days.  See what you observe about the bills, note any follow-up needed. Make the calls to get things fixed.  You are more in control of your finances than you were a month ago.  Feels good, doesn’t it?  Now, you can browse the internet for your next adventure.

3 Smart Expenses You Can Avoid

Looking at your spending plan, it’s fairly easy to anticipate the regular monthly expenses, and with a bit of planning, the gift occasions, school activities and annual fees.  What is frequently not anticipated are the expenses that others try to include without our pre-approval.  They offer, and we accept the opportunity to spend our precious money.

Awareness is the key to this conversation, and please understand the choice placed before you is optional.  You can start to realize that commitment or acceptance of others’ expectations can “force” you into an expense you didn’t even realize you wanted! 

Here are some examples that I have experienced in my own family’s finances:

•       When our family plan had an available phone upgrade, they went to our teenage son for a few years as he wore them out quickly.  Now, when the upgrade becomes available, there’s the anticipation of using the latest technology.  As soon as we had a chance, we upgraded my husband from a flip phone to the newest iPhone.  He primarily uses it to make calls.  Should we have waited a little longer, or selected a less expensive phone?  It is not a mandatory upgrade. We had a choice.

• Our kids, or we as parents, want to experience every sport, musical instrument, and community organization available.  Youth build lifelong skills and friends through activities.  Each pursuit has fees, equipment, travel and various expenses to contribute.  We will spend all afternoon and weekends driving them all over the place to participate.  Parents end up with no free time, and a lot less money.  Who says it has to be this way?  Set a limit on time and money for activities, which is VERY important with blended families who need to ensure all guardians are on board with the plan and able to give money and time.       
• Can you politely decline a destination wedding, family reunion of 3^rd cousins, or a weekend in Vegas with friends you don’t really enjoy anymore?  If you truly don’t want to go, save the money and precious time and say no.  Tell them you didn’t budget for it, you don’t have that much time, or whatever honest answer you can give.  Other people’s desires and priorities do not need to be forced onto you.  Feel comfortable telling the truth, and not participating out of guilt or responsibility.  You really have the power to make your own choices.

Wouldn’t it feel delightful to have more control of your cherished time and money?  Could you remove the culpability of not doing the things above, and replace it with the empowerment of making smart choices?  This is my goal at MoneyWise Advisors, to encourage you to take action and power to control your finances, and start achieving your goals and dreams.  Your personal finance strategy becomes the tool to increase your earning power.  What choices do you have in front of you today?

Change What?

I can’t count how many people have told me they will be ready to work with a money coach as soon as they take care of a few other things.  What could those things be that would delay starting a positive change in your life?

·        I’m too busy or I can’t afford it

·        My bills and bank statements are disheveled and I need to get organized first

·        Let me get done with this big project at work that is distracting me

·        I’m stuck right now anyway, so how could I work on changing?

 

If someone told you the work phrase “do you want fries with that?” could be in your past, and the new job pays twice the wage with benefits, why would you stay in the old job another minute?  If you received a gift certificate for a house cleaning, would you pick up the house first so they wouldn’t think you are sloppy?

 

We all have reasons we are afraid to move forward.  What if I start the new job, and find out that they don’t like me?  If we try a new spending plan we might not be able to see the inside of a restaurant ever again unless we’re working there to make some extra money.  It’s so overwhelming that looking deeper into the problem will only make it worse and I’ll get depressed.  These fears sound familiar to most of us thinking about a change in our lives. 

 

I recently was in the same quandary about working with a personal coach.  I’m afraid I’ll try and fail.  I want to be positive that I choose the best coach for me.   I’m not sure that I need to change all that much.  I could spend the money on something else.  I finally realized if I think the right coach is going to add value to my life, I should get started.  I can think of a few big decisions that I delayed, and later wondered what took me so long to make the easy choice.

 

Having gone through this thought process, I’ve committed to hiring that coach.  I’m ready to be open to change, and I don’t have to be done with everything else to start the coaching process.  Personal coaching is valuable to me, and I know I’ll make the time and effort to get the most out of it.

 

 What decision are you delaying?  Take the first step right now. 

 

Question:  What excuses did you overcome to move forward?  Share in the comments.

Balance Your Checking; Control Your Money

By Susan Wilson, MBA

Controlling your finances means understanding all of the money-related statements that your receive online and in the mail.  I don’t look forward to reviewing them; it’s a tedious task, but an important step to see everything is o.k. with your checking and savings accounts.  Here’s a list of things I have found myself and heard through my clients:

Life Insurance on Boat Loan (my hubby before we married)

 

Forgotten Gym Memberships

Unwarranted Overdraft or “Convenience Fee”

ATM and Credit Card Fees

Purchase Amount Errors

Unwanted Payment Protection Plans or Subscription Services

 

Yikes!  These are usually not small fees, and removing that $15 monthly life insurance on the boat loan (yes, the heirs would get a paid-for used boat) is instant money saved.  I just look through the line items and make sure they are legitimate. I look for any surprise fee hikes or excessive ATM fees I didn’t anticipate.  This is how you take control – know what is happening to ALL of your money.

One more thing - make sure you receive all of your statements if you have more than one account.  Awareness of address changes can prevent identity theft.  (Think exes and businesses you frequent.) It’s not the latest Moscow gang taking our ID’s, it’s most likely someone we know. 

This is one more action to take towards controlling your finances that doesn’t take money out of your pocket.  Hopefully, you’ll find some places you can recover money.  Now, don’t take all the findings and celebrate – pay off that nagging credit card bill that won’t go away.  Now, that’s control.

Please share what you found on your statements.  Learn more about taking control of your money at www.moneywiseadvisors.com 

Get Online Bill Pay Already!

By Susan Wilson, MBA

 

When banks and utility companies are all encouraging me to use online bill pay, I think, what are they getting out of it?  My money, of course.  What am I giving up?  Hassle, stamps, check fees, possible late fees and last minute changes on the amount I pay.  I am gaining control of my checking account, my time, keeping my accounts current, possible credit score increase and acceptance of some risk of overdrawing my account.

 

Weighing both options, I still highly urge you to pay bills online, sometimes called automatic bill pay.  There are a couple of ways to get set up:

Pay through the company billing you

Utilities, insurance, and even the DMV have online bill pay options.  You can pay with a credit card or from your bank account. Don’t worry about identity theft, their websites are safe.  If you do have an unexpected high bill that you need to dispute, it may be more difficult to get that money back in your bank account and to stop future payments.  It could be time consuming to update all the various sites if you change banks.

Pay through your bank

Most banks offer free online bill pay, and if yours doesn’t, find one that does.  Pay anyone on time and accurately.  The bank pays most electronically, while the gardener or babysitter will receive a paper check in the mail.   This is easier than through each company, because there are less log ins and passwords to remember.  You can also stop payments any time.   Decide how much and when to pay, streamlining the time you spend paying bills. 

Pay through bill-paying service

There are several companies who offer this service for a fee.  It can be used even if you have more than one bank account.  It is convenient and a quick way to streamline your bill paying.  Here is a website that compares some of the bill paying companies .

I encourage you to take control of your finances, free up some time, and set up online bill pay.  Gather your bills, select one of the options above, and get it started.  Figure out whether paying through the biller, your bank, or a bill paying service is best fitted for your circumstances, and make the switch.  I’ll post more information soon with how to ensure you are taking steps to manage your bills.  Remember, you are in control when you tell your money what to do.

5 Ways to Use Technology to Save You Money

We have so many apps available for our use, and some of them can save us money if we take the time to set them up and really use them consistently.  Here are my top five:

1.      Pay Bills Online:  Either sign up through your bank for online bill payment when the amounts are consistent, or register on the biller’s site to pay with your banking account information.  This saves time, is a greener no-paper option, and does not cost postage.  Manilla.com is a free website that can organize your bills.   An added benefit is that paying bills on time has a HUGE impact on your credit score.  30% of your credit score is based on keeping bills current, so setting your bills to pay automatically is a definite must.

2.      Get off road and meet or collaborate online as an alternative to face-to-face time.  Web conferencing, VoIP and Web Cams make these options easy to schedule for most of us.  Plan the meeting with a distributed agenda, ensure everyone has input, and summarize the action steps and who is responsible for each.  On-line meetings are usually faster and can be more productive when planned well and the action steps are clearly communicated.

3.      Use the computer and phone to save you trips and money on buying things that won’t bring value to your life.  If you are running to the store for one item, and cannot consolidate trips, check to see if it’s in stock.  How many times have you driven to the store to find that they are out of what you need, or the sale had too much demand?  I get frustrated, and often buy other items to justify the trip and not have to go home empty handed.  Get magazines and DVDs through the library (many can be downloaded at no cost.) 

4.      I’m surprised we still have fax machines in our world.  It is so easy to scan a document and send it via email as an attachment.  Many home and office printers have the scan feature you can use, and if you will use it a lot, a portable scanner can be purchased ONLY if the money saved is worth the purchase price.  Sending the email with a “read receipt” option can also be used if the document is very important and you want to track progress.

5.      Technology will NOT save you money if you spend more on apps and accessories than they help you.  I have a few of those items gathering dust right now.  I am now motivated to sell on Gazelle.com or share on freecycle.com to get the clutter out of my way. 

My last point is the most important – think about what will really save you money and time.  Take the money you do save and put it towards debt.  What technology helps you save money?

I'd like to thank Henckel Miranda for requesting this blog.  You can learn more about Henkel on his blog "Dough" at http://garipla.wordpress.com/

First Step to Control – Review your Bills

A strong first step for you to take to control your finances is to review all of your bills.  Gather a month’s worth of paper or online statements.  Get settled in a comfy chair with a shredder highlighter and your stack of papers (or computer with electronic statements). 

Here are some things to look for:

1.   Look at whose name(s) are on the account – is there an ex who shouldn’t be?

2.   Is the address right so you don’t miss any statements?

3.   What kind of fees did they charge you: over limit, late payment, payment processing

4.   Does the balance appear to be correct

a.   What is the minimum payment?  How much will it take to pay off in three years? They are required to provide that information on your statement.  Pay Off Loan Calculator

b.   What is the due date? 

c.   Review the interest rate(s) for the balance(s)

5.   Review all transactions every month

a.   You typically have 60 days to dispute an error with the card issuer and have the charge removed

b.   Credit card fraud sometimes starts with a very small charge to see if the card number is valid – catch it quickly and report

6.   Ensure your most recent payment recorded correctly

7.   Review the special messages section to see if they are increasing any interest rates, or making other changes to your account

The point of this review is to help you control your finances, and not every action step requires throwing money at it to make it go away.  One of the big things this review does is ensure you are not a victim of credit fraud, a lingering ex using your card, or a processing error by the credit card company.  Prevention and early resolution of errors will save you from the larger crisis that looms around the corner.