7 Actions You Can Take Now to Jumpstart Your Finances

It is never too late to give your finances a little boost by doing several things that will get you going. Think of it as Spring cleaning or New Years Resolutions for your finances. Here are 7 suggestions to help you get that boost. Feel free to choose the ones that will best apply to … Continue reading “7 Actions You Can Take Now to Jumpstart Your Finances”

It is never too late to give your finances a little boost by doing several things that will get you going. Think of it as Spring cleaning or New Years Resolutions for your finances. Here are 7 suggestions to help you get that boost. Feel free to choose the ones that will best apply to you and your situation.

1 – Log on to your various investment accounts and check their performance for the past year or 6 months. You can check to see if it is time to re-balance your portfolio after you see how your investments have done.

2 – Make sure that your filing is up to date. It is very easy to let important paperwork pile up and when you need it is no where to be found. If you don’t have a filing system, create one.

3 – If you haven’t already consider using a software package to manage your finances. The top package is Quicken. You can pick up a basic version for about $29. It is relatively easy to setup and should not take more than a couple hours to get going. There are also many free packages. Just do a Google search for “free personal finance software” and you will be bound to find one that suits you.

4 – If you have not already started to bank online, sign-up for it at your bank’s website. This is a good way to keep close tabs on your money and get up to the minute balances for your accounts.

5 – Automate your savings. This is just a monthly transfer from your checking to savings account. It does not have to be a lot of money – any savings, even the smallest amount is a good thing. This is very easy if you have online banking. If you don’t, just call your bank and setup a monthly transfer from your checking to your savings account.

6 – If you don’t have a will, get one made NOW. You do not have to go to an attorney and pay a bunch of money to get a will any more. You can find plenty of places online to get inexpensive wills. Search around, you are bound to find one that fits your needs.

7 – Take some time and set some financial goals. They don’t have to be anything lofty, just goals that are measurable.

Don’t Let Christmas Ruin Your Finances

Christmas time can be a very costly time for everyone. This year with the credit downturn or “Credit Crunch” everything seems a bit more difficult than usual. Still, there are many ways to economise, even at Christmas!

Do the kids expect large presents?

Why is this? It’s most probably because they have been given large expensive gifts in the past, and they think this is the norm. Time to re-educate them perhaps? Think about the REAL Christmas spirit. It’s better to give your time, rather than just spend endless money on them.

Not everyone can afford to buy big presents, so why not buy really small presents instead? Actually it’s quite a fun thing to do, to have an arrangement with all members of the family and friends, that there is going to be a ceiling on the cost of each present, say $20 maximum. Even $10 will buy a perfectly good gift. It’s not what it costs after all; it’s the thought that counts.

As an example, a friend of mine had an old photo of her cousins, and this photo was particularly scruffy. So instead of going out to buy a present, she scanned this old photo onto her computer, ‘repaired’ it with a few touches, enlarged it, and printed it off on to photo paper. She bought a cheap but nice frame, and hey presto, one present! It’s definitely the thought that counts here.

Remember to stick to just one present for each person, and not three or four!

Do you need to buy new decorations each year?

If you do, think about why you do. Decorations should last a few years at the very least. It’s become the usual thing now to decorate the outside of your home, as well as the inside. It looks lovely yes, but expensive to buy, and expensive on the electricity. It’s an area where you could consider cutting back.

What about Christmas Dinner?

This too can be less expensive. Oh I know it’s lovely to buy a whole turkey, or goose, or whatever you usually have. But who says you have to buy a WHOLE turkey? In fact who says you need a turkey at all! Try another less expensive dish, and be a little adventurous.

I know someone who is planning to have cold salad on Christmas Day, with cold sliced turkey and some cold sliced ham. Lovely! You could always cook a hot meal on Boxing Day instead. It might actually be rather nice not having to cook an enormous meal on Christmas Day. More time to play with the kids and relax a little.

At Christmas there is usually too much food left uneaten. Do you throw yours away, or do you keep having turkey sandwiches, turkey stew, turkey curry, for days afterwards? Well, perhaps you might consider buying less food in the first place. Think of the savings.

Then there’s the New Year.

Time for a party surely? Well, the same thing applies here too. No need to splash out on such a lot of food and drink as usual. You know, it’s surprising but after the majority of parties there’s such a lot of food left on the table it’s difficult to know what to do with it. Most of it will inevitably be thrown away. What a waste!

Start the New Year with a Resolution. Spend less. Try different ideas instead of simply spending money you haven’t got. My advice would be to Plan Ahead in whatever you do, and in the majority of cases you will be able to economise.

The information above can apply to any time of the year, it doesn’t have to be just at Christmas time that you are careful with your finances!

Have a Very Merry Christmas, and a Happy New Year.

Your Personal Finance Resolutions for 2015

Work out your budget

It still amazes me how many clients I meet with who simply don’t know how much money they spend each month (and what it goes on!). Working out (and sticking to) a monthly budget is all about spending less than you earn. If you achieve this, month on month, you will be in a better financial position at the end of 2006 than you were at the start.

If you reach every pay day with an overdraft or credit card debt to clear from the previous month you are starting the new month on the back foot. Make it your personal finance resolution for 2006 to never spend as much as you earn each month. If you really want to buy something shiny and new but find yourself reaching for that credit card or store card, stop, think – do you really need it now or would you feel much happier if you bought it in a few months time with cash rather than debt?

Get out of the red

If you have short term debt (credit cards, store cards, overdrafts, etc) you will know that debt is a drag. It’s a drag on your ability to save for future objectives. It’s also an emotional drag on your attitude towards money and personal finances. Make clearing your short-term debt a priority before embarking on strategies to save for short-, medium- and long-term plans.

I still meet people with some very funny attitudes towards debt. There are people who prefer to have savings running alongside debt even when they are often getting charged much higher interest rates on the debt than they will ever receive on the savings. Whilst there is a certain comfort factor in knowing you have some savings behind you, it is counterproductive if your short-term debt is holding you back.

Don’t forget that the interest you get on your savings is taxed (10%, 20% or 40% depending on your income tax rate). When you compare your debt and savings interest rates always look at the net (after tax) interest rate you get on your savings to make a fair comparison.

Make a plan. This ties in closely with your monthly budgeting exercise. When you are working out what you are going to spend your money on each month ensure you prioritise debt over savings. Stop taking on more short-term debt. Mark a debt-freedom day on your calendar and stick to it. Celebrate your personal debt-freedom day; it’s something to be proud of.

Look to the future

One in ten of those surveyed by IFA Promotions claimed that starting a pension was their biggest priority in 2006. This year sees the biggest shake-up of pension rules seen in many years but this brings a great deal of retirement planning opportunities with it. From this April it will generally be possible to make much larger pension contributions than under the current rules. These large pension contributions will still be able to attract tax relief at your highest rate of income tax.

Once you have made contributions to a pension plan you can choose how the money will be invested. Seek professional advice to ensure that your retirement plans are invested in a way that is in line with your attitude towards investment risk, reward and volatility. You can choose from a wide range of investment options within modern personal pensions so there is no need to take unnecessary risk that you feel uncomfortable with.

Pay less Tax

No-one enjoys paying tax but many of us fail to take the simple steps that enable us to pay less tax. Each and every year we waste an average of £132 per taxpayer because we don’t take some simple planning steps and maximise our tax allowances.

There are some very easy tax-saving strategies you can use in 2006 to pay less tax.

If you are a higher rate taxpayer and your spouse is a non-, lower- or basic-rate taxpayer then consider transferring savings into their name. If you have £20,000 in savings in a joint account where one of you is a higher rate taxpayer and the other is a non-taxpayer (assuming a 5% gross interest rate) you can save £200 a year in income tax by switching from a joint account to a savings account in your spouse’s name.

Make sure you use your Individual Savings Account (ISA) allowances for this tax year and the next tax year. You have until April to maximise contributions into an ISA for the 2005/06 tax year. Every adult in the UK can contribute up to £3,000 into a cash mini-ISA and £4,000 into a stocks & shares mini ISA each tax-year, or up to £7,000 into a maxi ISA. The returns within your ISA are tax-free (with the exception of the 10% tax credit on UK dividend income which can no longer be reclaimed on UK equity income).

Consider maximising your pension contributions to get maximum tax relief. You have until 31st January 2006 to carry-back a pension contribution to the 2004/05 tax year. This year is the last opportunity you have to elect to have a pension contribution treated as if it was made in a previous tax-year. When the pension rules change in April 2006 this feature of pension contributions is being removed.

Review your mortgage

With interest rates at historically low rates, now is a good time to consider reviewing your mortgage. If your mortgage is on your lender’s standard variable rate (SVR) you are likely to be able to make a reasonable monthly saving by switching to a more competitive interest rate or product. There are costs associated with re-mortgaging and it makes sense to seek impartial expert advice. This will also save you the time of trawling the high street to locate the best offers. Because mortgages are a dynamic market the rates available are subject to change on a regular basis and some deals will only be available through an independent adviser.

Sort out your financial affairs

If you don’t have a Will, get one. You can write your own Will but there are some major risks involved with this DIY approach. Getting something wrong when writing your own Will could lead to significant legal fees to sort things out after your death. Find a professional to write your Will from the Society of Trust and Estate Practitioners (www.step.org). If you die without a Will, your estate will be distributed according to laws created in 1925. It is no surprise that these laws probably do not reflect modern thinking on inheritance! Don’t risk dying ‘Intestate’.

Whilst we are on this rather morbid subject you should also think about family protection. Run through a number of scenarios. What would happen to your family financially if you were to die? What would happen if you were to suffer a serious illness? What if you suffered an accident or illness and were unable to work for a long-term? Re-run these scenarios but apply them to your spouse as well. The impact of a house person dying or contracting a serious illness can often be as serious (or more so) than if this happens to the main bread-winner.

Check out your existing arrangements to ensure that they remain competitive. The cost of life assurance has generally fallen in the past five years. There are potential savings to be made here. Again, use an independent expert to review the entire market for you and ensure that the cover you are putting in place is suitable for your circumstances and objectives. At the same time make sure that your life assurance is written in trust. Writing these policies in trust can ensure that the proceeds are paid out quickly, to the right person or people and without liability to tax.

Meet with an Independent Financial Adviser

Make 2006 the year that you carry out a comprehensive review of your personal finances and financial objectives with an impartial professional who has access to the tools and knowledge needed to improve your current and future position. Most IFA’s offer a free initial consultation with no obligation they can identify areas that they can help you with and you can grill them about their qualifications, experiences and charges.

Ask lots of questions to ensure that you have found the right IFA for you. Make sure that they hold the appropriate qualifications to deal with your situation. The entry-level qualification for a financial adviser is the Financial Planning Certificate (recently renamed the Certificate in Financial Planning). This level of qualification is really only suitable if you are only seeking basic financial advice. If the advice you require is more complex then look for an adviser who holds the Advanced Financial Planning Certificate (AFPC). This is a more stringent test of knowledge and competence to provide financial advice.

Also, check that the adviser is truly independent. In June 2005 there were a number of changes to the way that the financial services profession works. An adviser can now choose to be tied, multi-tied, whole of market or independent. A whole of market adviser can offer products from every provider but they do not offer the option to pay for their advice with a fee. An Independent Financial Adviser offers a fee charging option and this can sometimes offer greater impartiality that paying for services through commission. In any case, remember that you as the client are paying for financial advice – either through product charges and commissions or an explicit fee. Ensure that you are getting value for money.

A Better Approach To Your Finances

If you’re struggling with levels of debt and wondering how your situation could be improved, then there’s no time like the present when it comes to tackling your finances. Taking some action is always a positive step in life.

It’s so easy to become worried about the state of things. You may begin to think that you can’t possibly find a resolution to the state in which you find yourself. But it’s important to remember that plenty of people have recovered from difficult financial positions. There’s no reason why you shouldn’t do the same.

All that you really need is a positive mindset and a practical methodology that will enable you to escape from your current plight. In fact, these two elements tend to go side by side. Once you can see that you have an approach that works, you should find it much easier to be positive about the situation.

So let’s look a bit more closely at a specific approach that will work for you. The thing to remember about finances is that they are often considerably less complicated than they initially seem. In essence, they are about getting some income and looking at how you spend it. It’s when you spend money at a faster rate than you can actually earn it that you generally start to run into problems.

This probably sounds pretty simple. That’s true, but this is the basis for the whole of your personal finances. If you remember these basics then you’ll be on the right track.

The best way to look at your finances is to build up a clear picture of what you earn and what you spend. You could do this by simply looking at an average month. Calculate your income and expenditure for that month. You may need to refer to payslips, online bank statements and other such documentation and records to help you get a complete picture.

This will allow you to see how the situation looks right now. This is a great first step. The next step is to look at how you can improve things. This is best done by looking at every single item of income and expenditure. For every item, consider how you could improve it. Could you be spending less on particular events?

By breaking your finances down into these small sections, you’ll find that they are much easier to manage. You’re suddenly left dealing with several small problems. Each of them can be tackled in turn. This is so much easier than getting stressed about having to deal with one seemingly massive issue.

Top 5 Ways To Prepare Your Finances For The Year Ahead

With the New Year having past us by, many of us are starting to think now about our New Year’s financial resolutions, one of the major issues that most of us always promise to address it finances. Most of us find that we could make a number of improvements to our finances, whether it is in terms of managing our finances and budgeting more effectively or whether it is in terms of cutting back and streamlining our outgoings.

With 2008 well under way and our Christmas spending hitting home, now is the time to start thinking about improving our finances, so that we can look at starting the New Year on a more positive financial note. Below are some of the top ways in which you can improve your finances for 2008.

1. Streamline your outgoings: It is amazing just how much money we all waste each year, often without even realizing. If you go through your regular outgoings with a fine tooth comb you could well come across things such as unused subscriptions and useless memberships for services that you no longer really use, and you can cancel these and put the money to better use.

2. Cut back on non-necessities: Of course, we all love to splash out from time to time, but many of us tend to live a champagne lifestyle on beer money. Go through your monthly outgoings and try and make cutbacks wherever possible on non-necessities such as going out and spending on clothes. By spending a few extra nights in – perhaps cooking dinner at home for friends instead of going out for meals – and avoiding the temptation of too much retail therapy you could save a small fortune.

3. Take advantage of the sales: Although this may seem as though it is contradicting the above, you can be really thrifty by taking advantage of the sales. Watch out for them, as many shops have sales at different times of the year, and not just January. This doesn’t mean you should go out and spend on anything that looks like the price has been knocked down even if you don’t really want or need it. However, try and determine whether you will need things such as clothes for work or for the kids in the coming months, and get them during the sales when you can often get twice as much for your money.

4. Improve your financial management: If you are the type of person that hates to look at their bank balance and does nothing to monitor income and outgoings then now is the time to make a change. Keep a track on everything that goes in and out of your account, and check your balance regularly. This will help you to avoid everything from becoming the victim of fraud or theft to accruing costly bank charges for exceeding overdraft limits.

5. Review your debts: Most of us have a number of debts in one form or another, whether it is credit cards, stores cards, or loans. Take a look at how much you owe and see whether you could save yourself hassle and money each month by consolidating your debts – or in the case of just credit card debts by transferring them onto a 0% balance transfer card.

Consider Your Tax Resolution Options Before Dealing With Back Tax Issues

When you owe money to the IRS, paying it off should be your top priority. However, you should consider what your options are for resolving your debt before you choose a course of action.

If you owe money to the IRS for taxes from years past, it’s likely that this burden is causing you to experience both stress and frustration. In order to lift the weight of back taxes off your shoulders, you should make an effort to pay off these debts as soon as you possibly can. Before you do, though, it’s in your best interest to explore what options you have for paying off your outstanding tax liabilities.

Before you can start paying the IRS for taxes that you owe, it’s a great idea to explore your options for tax resolution. Most people don’t have enough money to pay off the full amount of what they owe, so choosing the best tax settlement option is key. If you proceed appropriately, you can solve your tax issues without too much hassle, and you can get back on track with your finances.

Offers in Compromise

When you have serious tax issues, you should consider your options for filing an offer in compromise. An offer in compromise will allow you to settle your tax debts for less than what you actually owe, so this can be a great option for those who are struggling financially and owe lots in back taxes. It’s good for you to keep in mind that your offer in compromise must make sense and be agreeable to the IRS for it to be accepted. Typically, an offer in compromise is only accepted if it’s the most the IRS can hope to collect on your tax debts, as a result of the large size of the owed money compared to your assets. If the amount that you owe in back taxes is quite large and your offer in compromise is low, then your offer may not be accepted.

Installment Agreements

Another resolution option that you should consider when you are dealing with tax problems is setting up an installment agreement. An installment agreement will allow you to pay off your tax debts in monthly payments. Although this can be a great way for you to deal with your tax debts, you need to understand that it comes with a cost. You will have to pay existing penalties and continuing interest on the balance of your IRS back taxes, and this could add a significant amount to your tax bill. If you want to avoid paying these fees on your IRS back taxes, then you may want to opt for another type of resolution.

Secure Help from a Professional

Figuring out what you should do about your tax problems may require the help of a tax attorney. While you can file offers in compromise and arrange installment agreements on your own, it may be difficult for you to get the outcome that you are hoping for. If, however, you hire a tax attorney or other tax specialist to help you with this process, you could have a much better chance of finding an easy and affordable way to resolve your tax troubles.