What would we do if there was no financial education programs? There are thousands of bloggers, books, and financial literacy classes available, we just need to take advantage of these great resources and use them to improve our financial lives.
Apr 272012
Moving is a time when you really don’t want to be building up debt. You should be concentrating on getting settled, adjusting to a new location, and building wealth with your new job. Matt Wegner from FinancialExcellence.net shares his thoughts about how to plan for a move:
Move yourself or pay someone?
You can save money by moving your own stuff, but hiring a company to do some or all of the moving for you can be worth the cost. Get a few quotes and consider the time of the month/year as well as any storage costs that may be involved.
Rent or buy?
Where will you live? Apartment, rental home, or are you purchasing a new home? Be prepared to pay a security deposit for a rental and to have the utilities turned on (if applicable). If you are buying then what will the property taxes be?
Adjust lifestyle to your new life
What’s your new paycheck going to look like?
What’s your budget going to be?
Is there a State income tax?
What is the Sales Tax rate?
Will there be a change in property taxes (if buying)?
If you don’t plan ahead then you are probably going to end up reaching for that darn credit card again and go deeper into debt while in-between paychecks. Prepare by expecting there will be unexpected expenses.
Apr 262012
As you work hard to change your money habits, don’t mistake spending less on gifts for being “cheap” or “unloving”. You can give GREAT gifts if you’ll just consider what the gift recipient enjoys most.
Trinkets are nice, but they usually end up in someone’s garage sale. Why not give something that only YOU can give a person?
This is just the start of the conversation. Leave a comment below or email me atjulia@promisesfc.com when you get beautiful and intriguingly creative gift ideas for the people you love most!
Carrie from CarefulCents.com gives a brief explanation of taxable income and tax brackets.
Determine taxable income
Take the total of all income (W2 or self-employed such as from a 1099) and subtract any exemptions or deductions.
The 6 tax brackets
Taxable income will then fall into one of six tax brackets: 10%, 15%, 25%, 28%, 33%, and 35%.
Carrie’s view of how the income is taxed.
Carrie looks at her income as water and the tax brackets as a glass. The more income she makes the more glasses she will fill.
The amount of water she pours into the first glass will be taxed at 10%. If she makes more than the first “tax bracket glass” can hold then the overflow will go into the next tax bracket glass (15%), and so on. If she continues to reach certain income levels she will continue pouring until water flows into the 35% tax bracket glass. The water in these tax bracket glasses are taxed at higher rates.
What is “Effective Tax Rate”?
The effective tax rate is the average of the taxes charged from all the tax bracket glasses and the income she makes.
Brad Chaffee from EnemyOfDebt.com offers some great advice for those who are falling behind on debt payments and considering bankruptcy.
The Pro-rata Method can keep creditors off your back and help you avoid future judgments, or the execution of a judgment because you are declaring hardship and essentially asking for an alternative plan until you can afford to make the original monthly payments for all of your debt.
It is in the creditor’s best interest to accept this plan because it’s better for them to receive something rather than the nothing they’ll receive if you filed bankruptcy. You borrowed the money though and you want to pay it back, you just need a little wiggle room until you can get back on your feet.
Pro-rata Method
The Formula
Communication
Transparency
The Formula
The formula is based on your disposable income (money you have left over after paying for essential bills)
Let’s say you have the following debt load:
Debt 1 $7,500 (current minimum $500)
Debt 2 $5,000 (current minimum $200)
Debt 3 $2,500 (current minimum $100)
Debt 4 $2,500 (current minimum $100)
Debt 5 $2,500 (current minimum $100)
Total Debt $20,000
Total Minimum Payment(s) $1,000/mo
Disposable Income $700/mo
You are $300 short.
Formula 1: Figures out what percentage each debt represents of your total debt.
Debt 1 $7,500 divided by $20,000 = .375 (37.5%)
Debt 2 $5,000 divided by $20,000 = .25 (25%)
Debt 3 $2,500 divided by $20,000 = .125 (12.5%)
Debt 4 $2,500 divided by $20,000 = .125 (12.5%)
Debt 5 $2,500 divided by $20,000 = .125 (12.5%)
Formula 2: Determines what your new minimum payments will be.
Debt 1 $700 multiplied by .375 = $262.50
Debt 2 $700 multiplied by .25 = $175
Debt 3 $700 multiplied by .125= $87.50
Debt 4 $700 multiplied by .125= $87.50
Debt 5 $700 multiplied by .125= $87.50
Communication & Transparency
Communicating with your creditors and being as transparent as possible will make this process much smoother. When/if your disposable income changes so should your minimum payments.
It’s important for you to let your creditors know that you wish to honor your obligation. You have every intention of paying them what you owe; you just can’t pay them the full minimum payments as they are.
Send each creditor a letter explaining your situation, why you’re experiencing hardship, and be sure to attach your budget and pro-rata forms with the letter.
The key is communication.
If your creditors feel you are doing everything you can and have every intension of paying them the money you owe them, the less likely you are to end up in court or to have your wages garnished.
Apr 232012
Jon White, Personal Finance Coach giving a new perspective on your money, shares 3 ways to pay for your child’s college education. It pays to plan ahead and either take advantage of tax-favored accounts (529 or ESA plans) or strengthen your household’s finances by becoming debt free and cash-flowing education as they go.
Option #1: 529 plans
Each State administers their own 529 plan
Different rules from state-to-state
Have the ability to deduct from State taxes
Limited to the choices they offer
Option #2: Coverdell Education Savings Accounts
Also known as ESA
Grows tax FREE!
Limited to saving $2,000 a year
Has many more options to chose from
Option #3: Cashflow
Pay-as-they-go
Best accomplished when debt free
Lose the opportunity of tax-advantaged savings
5 rules OnTargetCoach and his wife follows when it’s time to work on the household budget:
Rule #1: Invite your spouse – do it a few days ahead and in person (don’t text the invite!)
Rule #2: Bring snacks (or dessert) to entice your spouse to attend
Rule #3: Bring a timer – agree to meet (excuse me – PARTY) for a certain amount of time. OnTargetCoach’s wife recommends no more than 30 minutes
Rule #4: Come prepared with previous month’s budget, a calendar, and your current month’s budget proposal
Rule #5: Agree. Once everyone has had their say and the budget balances then shake on it and stick to your newly-created moneyplan.
Enjoy your party! And remember to please budget responsibly!
Apr 192012
Jeff Rose from GoodFinancialCents.com tells us how mutual funds are like chicken and vegetable soup.
It’s convenient: You don’t have to measure out the ingredients or even chose what goes into it. The hard work has already been done for you.
When buying a mutual fund you are hiring a manager: A Mutal Fund Manager picks the best ingredients to make sure it’s the best it can be.
There’s variety: There are many different things that can go together and lots of options to chose from.
If you want to learn more about mutual funds, check out another great video by Jeff:
http://www.goodfinancialcents.com/what-is-a-mutual-fund-with-some-steak-chili-on-the-side/
Julia Graylion from PromisesFC.com encourages us to be resourceful – at home and at work.
Paying off debt and committing to live within your means is not only an acknowledgement of the finite nature of your money. Living within your means also incorporates using your time, your energy, your attention and all your limited resources so that you and others enjoy the maximum benefit.
As you find more ways to manage your household dollars, there will be an indirect benefit on how you manage your business resources. More resourcefulness shown at work sets you up for increased earnings, more benefit options and even promotions within the company or as other companies actively recruit you.
Way to go! showing YOUR resourcefulness in visiting our group of Financial Coaches, Bloggers and Consumer Advocates during Financial Literacy Month 2012. Be a blessing and forward one (or all) of these video blogs to your facebook page or tweet about us or come find us on LinkedIn. You can find most of the videos at http://YouTube.com/MoneyPlanSOS
Here’s to equipping YOU for your wildest success!
Apr 172012
Bradley Vinson from bradleyvinson.com explains what he feels is the most important step to debt freedom. H.O.P.E for a life without financial stress.
Hate debt
Organize life
Prioritize
Engage with positive people
