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FIND A FINANCIAL ADVISOR FINANCIAL PLANNING FOR LIFE EVENTS
MANAGING & PROTECTING YOUR CREDIT SAVING FOR RETIREMENT
A Special Supplement to March 15, 2015
2—Cleveland Daily Banner—Sunday, March 15, 2015
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There are benefits to having a financial plan (MS) — Financial planning is often mistakenly assumed to be a concern for the wealthy. That assumption essentially promotes the idea that people without much money need not worry about what to do with their finances. However, financial planning can benefit people at all income levels, even helping those at lower income levels move into higher brackets if they plan successfully. Though having an idea of how to spend and grow your money is an idea many people would likely embrace, a significantly large number of people do not have a financial plan. In its 2012 Household Financial Planning Survey, the Certified Financial Planner Board of Standards found that just 31 percent of financial decision makers in families had created a financial plan. Some survey respondents did so on their own, while others used the services of a financial planner. Though some might be intimidated or even scared to institute their own financial plans, it can be done. For those who are especially hesitant to develop their own financial plans, financial planners can help you define your goals and make those goals a reality. The benefits of financial planning are numerous, helping men and women build better financial futures. n A financial plan forces you to define your goals. One of the biggest advantages to financial planning is it forces men and women to define their financial goals. An effective financial plan should consider both short- and long-term goals. If you hope to one day own a home, a financial plan can help you figure out how quickly you will own that home. A good financial plan also can help you map out a course for retirement. Ambiguity with respect to your finances is potentially dangerous. Saying you want to retire at 60 and developing a plan to make that happen are two very different things, but the latter can make it happen while the former won't get you anywhere unless you take action. Be as specific as possible when defining your goals, and recognize that, depending on when you are making your financial plan, you might need to reassess those goals if they are not realistic. n A financial plan can help you curtail your spending. With a financial plan in place, you're less likely to waste your money on frivolous things. Without a plan, you're more likely to treat money as disposable, putting your financial future in jeopardy as a result. A careful examination of your financial situation can shed light on areas where your spending is excessive. A negative cash flow, which occurs when there is more money going out than coming in, has never been a part of a successful financial plan. Correcting such a situation, which is often accomplished when people establish a financial plan that trims excessive spending, can go a long way toward securing your financial future. n A financial plan can be motivational.
Working With a financial planner can help men and women define their financial goals and make those goals a reality. Another significant and often overlooked benefit to financial planning is how such planning can act as a motivator. A good financial plan will include certain measuring sticks, such as having debt paid off by a particular date or a certain day by which you hope to deposit a certain amount of money into your savings. These measuring sticks often motivate men and women to be more responsible with their money, and many people find living up to short-term financial goals to be very rewarding. n A financial plan makes better use of your money. Even if you don't have any negative spending habits, a financial plan can help you make better use of the money you do have. A closer examination of your finances can often yield a host of ways to grow your money or save it. For example, you might have multiple insurance policies, some of which offer duplicate coverage. Examining each policy and removing duplicate coverage can save you money and help you spend that money in better ways. You wouldn't pay for the same slice of pizza twice, so why pay for the same coverage twice? But unless you make a financial plan, you are unlikely to find those areas where you're wasting money or discover the numerous ways in which your money can be better spent. n A financial plan helps you grow your money. Even if you are worried about investing or especially skittish when it comes to
risk, you will need to find ways to grow your money, and a financial plan can help you do just that. The concept of inflation dictates that the dollar you have today won't be worth as much next year, meaning you will need to take steps to grow your money if you hope to have enough to get by in retirement. A financial plan can help everyone, whether they're risk-averse or not, grow their money. Something as simple as opening an interestbearing account will grow your money more than if you were to put that money under the mattress. Without a financial plan that includes ways to grow your money, the money you have will only lessen in value as time goes on.
Ed Jacobs, LUTCF Financial Representative 2380 N. Ocoee St. Cleveland, TN 37311 423.473.8002 office 423.473.8007 fax ed.jacobs@nmfn.com www.nm.com/edjacobs Member
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The best time to plan a funeral is when you don’t need one! Most people plan their vacations, plan for retirement, even plan things to do each day, but feel uneasy when thinking about preplanning their funeral. It’s just not comfortable! However, preplanning a funeral makes a lot of financial sense, and allows you peace of mind to know that your loved ones don’t have to be burdened with the decisions that planning a funeral require. Let Ralph Buckner Funeral Home and Crematory’s preplanning specialists assist you with their experience, and give your family the peace of mind of knowing that everything has already been decided. For more information, call for an appointment now at (423) 472-1152, or visit our website at ralphbuckner.com.
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Managing your mortgage, your money and more mortgage payments and other home-related expenses so that your family can remain in their home.
(NAPS) — Settling into a new place can be an exciting time. You’re unpacking, meeting new neighbors, getting the “lay of the land” and making decisions about how to furnish and decorate your home. At the same time, you’re assuming many new financial responsibilities, such as mortgage payments and maintenance costs. That’s one reason it’s important to protect yourself and your family by making sure you have a sound financial foundation. Savings: More important than ever While setting aside money for emergencies is a good idea no matter what, it’s essential that, as a homeowner, you keep a reserve handy in case the unexpected happens. Homeowners can find themselves facing expensive repairs that shouldn’t — or can’t — be delayed. Adequate savings can keep you from having to choose between postponing a needed repair and risking further damage to your home—which may require spending beyond your budget. Savings can also be used to pay for home improvement projects, such as remodeling a kitchen or bathroom or building an addition, that may enhance the value of your investment and help you make the most of your home. An obvious place to put your savings is in a traditional FDIC-insured bank account. Another alternative would be to place your money in a money market fund. These are conservative investments that offer competitive interest rates and checkwriting privileges, so assets in money market funds can be easily used to pay your mortgage and expenses in case of an emergency. An investment in a money market fund is not FDIC insured or guaranteed by any other government agency. Pay yourself first It can be difficult to think about saving money when you’re a new homeowner; you may have just spent a significant amount of money on a down payment, and you are already diverting a large portion of your income toward the mortgage, property taxes and homeowner’s insurance. Even on a tight budget, however, saving
Don’t overlook life insurance Life insurance can also help: n Replace lost income, so your family can maintain its current lifestyle; n Ensure that goals — such as a child’s education — can still be achieved; n Pay final expenses, such as medical bills and funeral expenditures. Speak with your insurance representative An insurance representative can also discuss what products may be suitable for your unique needs and make specific investment and insurance recommendations.
A good insurAnce policy can help protect your home and your family’s ability to live in it. money doesn’t have to be a painful experience. Simply get into the habit of “paying yourself first.” Every time you get paid, put aside a set amount before using any of it to pay bills or make purchases. Many financial companies, such as First Investors, can facilitate this by making the process automatic; a fixed amount can be automatically deducted from your paycheck or your bank account on a regular basis and put into a mutual fund account. Protecting Your Home Most owners buy homeowner’s insurance, and for good reason. Your home is likely your largest single asset and investment. It must be protected in case of fire, burglary or natural disaster. But a home is also a major source of expenses: mortgage payments, property taxes, maintenance and the like. If your household loses the earning power
of a loved one, your family might not be able to afford those costs. That’s where life insurance steps in. Its benefits can be used to help cover
Learn More For further information about First Investors funds or variable products, you can get a free prospectus and summary prospectus by contacting a representative, calling (800) 423-4026 or visiting www.firstinvestors.com. Since 1930, First Investors has been helping individuals and everyday families reach their financial goals with competitive investment, life insurance and annuity products.
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If You’re Leaving Your Employer, Do You Know Your 401(k) Options? At Edward Jones, we can explain options for your 401(k), including leaving the money in your former employer’s plan, moving it to your new employer’s plan, rolling it over to an Individual Retirement Account (IRA) or cashing out the account subject to tax consequences. We can help you review your options so that you can select the one that’s best for you. If you decide to roll it over to an Edward Jones IRA, we can help.
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How to handle a temporary loss of income (MS) — Millions of North Americans are struggling to make ends meet, and data suggests many adults are living paycheck to paycheck. A study released in 2012 by the Consumer Federation of America and Certified Financial Planner Board of Standards revealed roughly 38 percent of Americans stay afloat by living paycheck to paycheck. In 2010, a national survey showed that around 60 percent of Canadians would be in financial peril if their paychecks were delayed even one week. Household liabilities, including mortgages and rents, as well as other established debt makes it impossible for some people to remain financially sound without a steady income. Should a circumstance like a medical illness, loss of job or furlough in pay delay a salary, many people would quickly find themselves in financial hot water. Despite conventional wisdom that suggests people should have enough money set aside to cover at least six months' of expenses, many people do not even come close to this amount. So what to do if your are faced with a temporary loss of pay? Everyone's situation is unique, but the following tips can help men and women weather the storm of financial uncertainty. n Remain calm. When money suddenly stops coming in, remain calm and assess the situation. Now is the time to take out financial worksheets and bank statements. Add up the amount of money you have in the bank and any assets that can be liquidated without
penalty. Compare this to the money that is spent each month. Once you have an accurate picture of your finances, you can establish a plan. n Explore assistance programs. Laid off workers may be eligible for unemployment benefits. Be sure to file for unemployment as soon as possible. While unemployment benefits won't equal your previous earnings, the money can help pay bills until you are able to get back on track. Individuals sidelined from work by an injury may be eligible for compensation through worker's programs or any personal insurance plans. n Talk to your creditors. It is best to be open and honest with creditors so that this blip on your financial history doesn't end up causing any long-term damage to your credit. Many creditors have contingency plans in place and will be willing to work with individuals who anticipate trouble paying their bills. You may be able to temporarily freeze accounts or waive payments for a certain period of time without penalty. If you have a store credit card, you may be able to negotiate a cash settlement to wipe out the debt. Some creditors will take as little as a few dollars a month as good-faith payments. Just don't wait until it's too late to negotiate with creditors. n Find ways to cut back. Lack of work may have already cut out
some of your daily expenses, such as commuting costs. However, now is also the time to assess if any luxuries can be dispensed of to save money. Think about cancelling expensive mobile phone plans or cable service. Cease having dinners out on the town or ordering take-out. Kids may need to make concessions on extracurricular activities that cost money. These luxuries can be restored when a steady income is once again coming in. n Talk to family members. Do not hide the situation from friends and family members. Be honest with family members about the situation, and they may offer advice or some financial help. Although loans between family and friends can be tricky, they may be your best option to stay afloat financially during a rough patch. n Steer clear of credit cards. Many credit cards come with steep interest rates, so using credit cards to secure cash advances or make purchases is a risky proposition. Explore other options before resorting to credit cards to bail you out. n Be open to new employment. Keep an open mind when searching for a new job. You may need to settle for something part-time until a full-time opportunity comes along. Think about looking outside of your normal line of work and into industries that are thriving even in tough financial times. n Stick together. Financial uncertainty can
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(MS) Income tax season is a happy time for many people. Those who anticipate a considerable refund on their taxes look forward to having extra money; some individuals even plan to finance big-ticket purchases entirely with their tax refunds. Smart money management can turn a refund check into a nice nest egg or stretch dollars to make the most of this windfall of cash. The following money-management tips can help anyone develop strong saving and spending habits that can pay dividends for years to come. Get organized When looking to make the most of your tax refund, start by organizing your financial documents and getting a grasp on your spending and saving behaviors. Examine your income-to-expenditures ratio to see where the majority of your money is going. It can be difficult to make significant changes with regard to your finances if you don't have ready access to your financial records and a strong appreciation of how your money is being spent.
take its toll on a family. Naturally, losing a job or having a temporary loss of pay can take its toll on morale and put added stress on relationships. But families who work together can ride out the situation successfully. n Make plans for the future. Realize this type of situation can happen again, and commit to making future plans for emergency savings and other coping strategies. Find ways to achieve a relatively stable nest egg so that you can weather any future financial storms.
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Three financial planning things not to do (NAPS) — It is not surprising that most New Year’s resolutions revolve around health and financial matters, two areas that emerged as key priorities for Americans in Northwestern Mutual’s 2014 Planning and Progress Study. The study underscored the need for better decision making, with 60 percent of Americans stating that their financial planning needs improvement and more than half admitting that they do not feel financially secure. Moreover, with longevity and costs increasing at a steady pace, there is also likely heightened pressure to prepare for the future, especially considering that, per Bankrate research, one-third of
American workers have no retirement savings whatsoever. However, as the saying goes, “the best laid plans of mice and men often go astray,” and New Year’s resolutions seem to prove the point. A recent Forbes magazine poll found that only 8 percent of Americans actually succeed in keeping their resolutions. In fact, a different survey showed that more than 10 percent of New Year’s resolutions don’t even make it to the Super Bowl. “While the new year is a logical starting point for new endeavors, resolutions likely have a high fail rate because people tend to set lofty, unrealistic expectations or view
REFUND from page 5
National Retail Federation's annual Tax Returns Study, 40.2 percent of respondents said they planned to stash some of their refund in savings in 2013. While traditional savings or checking accounts may offer nominal interest rates, longer-term certificate of deposits or money market accounts may yield more interest.
Pay off high-interest loans When addressing your finances, take inventory of any high-interest loans, including credit card bills. It will save you more money in the long run to pay off this type of debt as soon as possible. The earlier such debts are eradicated, the less you will ultimately pay in interest. What's more, paying off debt helps establish a better credit record and score, which can make you eligible for lower interest rates in the future. Using a refund to eliminate debt is more beneficial than simply letting the refund sit in the bank, where it's likely to accrue less interest each month than the interest that accrues on your credit accounts with outstanding balances. Investigate savings programs It is estimated that customers who don't have an account at a bank or credit union spend, on average, more than $800 at checkcashing businesses each year. Opening up an account with a credit union or bank will immediately save you money on check-cashing fees. Speaking with a banking representative can also provide information about various programs that will enable you to save your tax refund and earn money on it through interest accumulation. In the
Talk to an investment specialist Your income tax refund may be just what you need to start investing. A 2012 study by TD Ameritrade indicated 63 percent of respondents said they plan to save or invest at least part of the money they get back on their taxes. A financial planner or stock broker can guide you through potential investments that carry the right portfolio and level of risk for your needs. If you prefer to do the work yourself, many investment companies have user-friendly websites where account holders can manage their own investments and monitor the daily performance of those investments. With the right investment, you can turn your refund into a substantial amount of money over the course of several years. Stretching tax refund dollars means making smart choices regarding money management. Rather than splurging tax returns on big-ticket items, use your refund to grow your savings, begin an investment portfolio or pay down debt.
change as a short-term goal,” said Rebekah Barsch, vice president of planning at Northwestern Mutual. “Life is a marathon, not a sprint, and people would be better served to change their mind-set from New Year’s resolutions to solutions for a lifetime.” According to Barsch, building solid financial habits that last requires broadly changing overall attitudes, which will then shape ongoing decision making across a broad range of financial matters. To that end, instead of a “to do” list, Barsch suggests the following “don’t” list as a foundation for improving long-term financial well-being: n Don’t put off important conversations — Northwestern Mutual research shows that Americans would rather discuss death and intimacy than money. Overcoming this discomfort is essential, as open dialogue with partners, loved ones and professionals is the foundation for effective financial planning. And the benefits of planning are clear. According to Northwestern Mutual’s 2014 Planning and Progress Study, disciplined financial planners feel substantially more financially secure than those who consider themselves informal or nonplanners. n Don’t put all your eggs in one basket — While Northwestern Mutual research shows
that most Americans over 25 (67 percent) have a savings account, just a fraction own stocks, bonds and real estate. Considering a wide range of solutions to meet financial and lifestyle objectives can play an important role in strengthening overall financial security. n Don’t pass poor financial habits to your children — A strong motivation to improve your own financial behaviors is to set a positive example for your kids as early as possible. Good and bad habits have one thing in common — the earlier they start, the harder they are to break. Themint.org and themintgrad.org have information, tools and resources to help younger children and millennials, respectively, enhance their money smarts. For more information on financial planning, please visit NM.com.
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Disputing credit report could get easier under new rules NEW YORK (AP) — Disputing a 180-day waiting period to allow time mistake on your credit report could for insurance payments to be applied. get easier and the effects of medical The agencies agreed to remove from debt less severe under changes credit reports previously reported being made by the three largest medical collections that have been or credit-reporting agencies. are being paid by insurance compaThe Monday announcement by nies. the agencies — Equifax, Experian This comes after a move in August and TransUnion — comes after by Fair Isaac Corp., the company months of negotiations between the behind the commonly used FICO credcompanies and New York Attorney it score, in which it announced that General Eric Schneiderman. medical debt would have a smaller Consumer advocates have long effect on the score. It also said at the sought a revamp that would reduce time that debts that go to collection errors on credit report and make agencies and are repaid wouldn’t correcting them easier. Data colcount against a consumer’s FICO lected by the agencies on hundreds score. of millions of people are used to Equifax, Experian and TransUnion create credit scores, which can are honing their focus to better handle determine who gets a loan and how disputes with consumers and to help AP Photo/Elise Amendola, File victims of identity theft and fraud. much interest is paid on it. In thIs FIlE Photo, consumer credit cards are posed in North The three credit reporting agen“The nation’s largest reporting agencies have a responsibility to Andover, Mass. The three largest credit reporting agencies will cies will jettison reports on debts investigate and correct errors on change the way they handle records in a major revamp long sought that didn’t arise from a contract or consumers’ credit reports. This agreement with the consumer, such agreement will reform the entire by consumer advocates. The changes were announced Monday as tickets or fines. industry and provide vital protec- after talks between Equifax, Experian, TransUnion and New York The changes are intended to protions for millions of consumers Attorney General Eric Schneiderman. vide people with more transparency across the country,” Schneiderman and more simple navigation when said in a statement. dealing with the bureaus that hold Under the changes announced their credit reports. Monday, people who contest items in their tions on what they can do if they don’t like the The plan gives hope to consumers that have credit reports will receive more information answer they get. In a bid to increase accuracy, been frustrated with the quality and accuracy concerning those disputes, including instruc- medical debts won’t be reported until after a of their reports, the National Foundation for
How new credit-reporting firms’ changes may affect you The Associated Press
The three big credit reporting agencies are making changes that could help steer some consumers clear of the credit dog house. Data collected by the agencies Equifax, Experian and TransUnion on hundreds of millions of people are used to create credit scores. Those scores can determine who gets a loan and how much interest is paid on it. The move stems from months of negotiations between the companies and New York Attorney General Eric Schneiderman, one of several state attorneys general who have placed the credit reporting industry under increased scrutiny. Mississippi Attorney General Jim Hood sued Experian last June, claiming the firm has knowingly included error-riddled data in consumer credit files. In Ohio, Attorney General Mike DeWine is leading more than 30 states in an investigation into the credit firms. That suggests more changes by the industry could be coming. So how will these latest changes affect you? Q: WHAT’S CHANGING HERE? A: The credit bureaus have agreed to make several changes. Two of them have the potential to affect consumers the most: changes to
how people go about disputing errors in their credit files and in the type of credit data that will appear in their files. Q: WILL IT BE EASIER TO DISPUTE ERRORS IN MY CREDIT REPORT? A: In theory. Let’s say you’ve made a timely payment on your credit card but it mistakenly shows up in your credit file as a late payment, potentially weighing down your credit score. Right now, consumers who want to fix that error can file a dispute with the credit reporting agencies, but it falls on the consumer to get the mistake fixed with their credit card company. In addition, the credit agencies basically defer to the creditor. To address this, the firms have agreed to hire employees tasked with reviewing consumer credit disputes independently and not merely rubber-stamping what credit card issuers and lenders say. Q: WHAT ARE THE CHANGES TO MEDICAL DEBT? A: In a bid to increase accuracy, medical debts won’t be reported until after a 180-day waiting period to allow time for insurance payments to be applied. The agencies agreed to remove from credit reports previously reported medical collections that have been See CHANGES, Page 8
Credit Counseling said in a statement. “The measures taken to improve the consumer experience and data quality are a significant step toward addressing some of the most common complaints about the credit reporting agencies,” it said. A working group will be formed under the agreement to regularly review consistency and to ensure that collected data is applied to consumers uniformly. The changes will begin to appear over the next several months. Discussions with other attorneys general are ongoing and there remains the possibility for more agreements ahead.
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Finding a financial advisor (MS) — The financial industry has changed over the last half decade, and middle class men and women looking to grow their money have no doubt experienced that change firsthand. Unlike in years past when large financial firms welcomed middle class investors with open arms, many firms now take no such approach, offering little to no incentives to their own brokers for accounts that are not in excess of half a million dollars or more. Much of this shift can be traced to heightened scrutiny of the financial industry in response to the economic downturn that began in 2008. More regulations and higher costs have made it less cost-effective for financial firms to cater to middle class investors, many of whom are in the dark about the best ways to grow their money. But even though the industry has changed, men and women can still find financial advisors who can help them plan their financial futures. n Recommendations: Arguably the best way to find a financial advisor is to seek recommendations from family and friends, ideally those in similar financial shape as you. Though larger firms may prefer to ignore middle class investors, some firms make a point of catering to this oft-underserved market. When asking friends and family for recommendations, try to determine if any of the people you speak with have their own broker or simply speak with customer representatives when issues arises. Companies that provide you with your own broker may be easier to work with and more likely to listen to your concerns than those that do not assign you your own broker. n Fees: When on the lookout for a financial advisor, inquire about the fees you would have to pay if you chose a particular firm. Annual fees typically hover around 1
percent, but some firms willing to take smaller investors may charge nearly double that, knowing that middle class investors have few other options at their disposal. Determine the fees a firm will charge before making your final decision. When asking about fees, ask the representative to explain the details of each fee, noting if the firm will earn a specific amount if they sell you a particular product. If they will, they may be incentivized to sell you a certain product even if that is not necessarily in your best interest. n Services: It’s also important to distinguish between the services each firm provides. Some will only sell you advice, while others offer comprehensive planning that can help you in various areas, including retirement, estate planning and tax planning. Choose the firm whose offerings best match your needs. n Approach: Many investors find it’s best to work with financial advisors whose approach to investing and financial planning matches their own. If you’re risk averse, then you likely won’t be comfortable working with a financial planner whose approach is aggressive. Likewise, if your goal is to make as much money as possible and you don’t mind taking risks, then a more conservative planner likely won’t be able to yield the types of results you’re looking for. Identify your own approach to investing and planning, and then look for a planner who shares that philosophy. Upon looking for a financial advisor, smaller investors may no longer find an industry that’s waiting to welcome them with open arms. But there are ways for middle class investors to find financial planners who are willing and capable of managing their money.
CHANGES from page 7
A: A working group will be formed under the agreement to regularly review consistency and to ensure that collected data is applied to consumers uniformly. Q: WHEN WILL THE CHANGES TAKE PLACE? A: The changes will start to be implemented over the next several months. Discussions with other attorneys general are ongoing and there remains the possibility for more agreements ahead. Q: AM I ELIGIBLE FOR MORE THAN ONE FREE CREDIT REPORT A YEAR? A: Yes. Right now, consumers are entitled to get one free credit report a year from each credit reporting agency. The Attorney General’s agreement requires that the firms provide a second free report to consumers who experience a change in their report after they dispute something in their file. This will let consumers verify that the credit agencies corrected the error. To get a free report, visit AnnualCreditReport.com.
or are being paid by insurance companies. Medical debts often arise from insurance coverage delays or disputes. Over half of all collection items on credit reports are medical debts and those debts may not accurately reflect consumers’ creditworthiness, according to a statement from Schneiderman. Q: WHAT ABOUT PARKING TICKETS? A: The credit agencies have agreed that parking tickets, library late fees and similar fines won’t appear on consumers’ credit reports, sort of. The idea is to exclude debts that don’t arise from an agreement by the consumer to pay back money, as in a loan or credit card. Still, if any of those debts gets sold to a collection agency, it’s possible the unpaid debt record could end up on your credit report anyway. Q: WHO WILL MONITOR THE CHANGES?
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Rebounding from a late start to retirement savings (MS) — Some people do not have the ability to begin saving for retirement early on. Others may have brushed retirement savings aside for so long that they are now worried that it’s too late to begin socking away money for retirement. While it’s best to start saving for retirement as early as possible, the good news is that it’s never too late to start planning for retirement. If your 40th birthday has long passed and you’re finally thinking ahead to retirement, consider these catch-up strategies. n Research tax-advantageous retirement savings plans. A financial planner can point you in the right direction, or consult with your employer about employee programs. Deposit money into a 401(k) or 403(b) plan or another retirement vehicle. Jump on any opportunities when your employer matches invested funds. Investigate an IRA and find out if there are any government incentives. Depending on your age, you may be able to deposit more money into such accounts than other investors. n Cut back on expenses. Cutting back on unnecessary expenses is a great way to save more money for retirement. Figure out where you can save some money you can then allocate to retirement savings. Maybe you can reduce insurance coverage on an older car or raise your deductible? Downsize cable packages or skip that costly cup of coffee on the way to work. Perhaps it’s time to look for a smaller, less expensive home or a compact car instead of an SUV.
Any money saved now will benefit you when the time comes time to bid farewell to the workforce. n Delay your retirement. Many people who retire find themselves bored and looking for ways to fill their time, and as a result more and more people are delaying their retirement, which also gives them more time to save for that day when they do call it quits. If you want to work less, discuss and negotiate a phased retirement with your bosses that allows you to stick with your employer but gradually work fewer hours until you retire completely. You may be able to work part-time for several years and retire when you’re most comfortable. n Consider more aggressive funds. Even if you are 50 you still have a few decades before retirement, which leaves lots of time to grow your retirement savings. But you may want to consider more aggressive funds that can help you catch up more quickly than less aggressive investments. Just know that aggressive funds may also leave you susceptible to substantial losses. n Don’t amass debt. If you’re saving for retirement but only paying minimum balances on your credit cards, then you’re not really saving. Pay down credit card debt before you begin to set aside money for retirement. Delaying retirement planning may mean you have to work a little harder to build up a solid reserve. But by following some financial tips and persevering, you can still enjoy retirement with security.
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When it comes to saving and investing, make time your friend (NAPS) — While many find it’s easier to make excuses than to make a commitment to save, it doesn’t have to be that way. The key is to have a plan you can follow and stick with it. To help you get started, here are some tips. The Need For Savings For those who seek financial security, savings need to be understood as a necessity, along with food, shelter and clothing. Every household should strive to have a cushion of savings in place — generally enough to cover
three to six months’ worth of expenses—in case of an emergency or a sudden loss of income. It’s also a good idea to have life insurance in place as well as investments for those long-term life goals, such as funding a college education, buying a home and building a nest egg for retirement. Make Time A Resource When it comes to saving and investing, time can often be your strongest ally. Take the case of Amy and Sam. Amy began a new
Simple ways to trim monthly expenses (StatePoint) — Everyone seems to be looking for ways to save more money, especially as the cost of living is on the rise. By trimming expenses on the things you need, you can devote more toward the things you want, as well as save more for the future. The discount experts at Dollar General are sharing some money-saving tips to help reduce your monthly bills. Home Maintenance If you’re paying a professional to perform simple home maintenance tasks and keep up the lawn, consider doing it yourself. From pest prevention to raking and watering the lawn, many such duties are simple to perform with inexpensive tools and a free afternoon. You can also lower your monthly utility bills with a bit of maintenance and a few modifications. By frequently changing your heating, ventilation and air conditioning (HVAC) filters, you may be able to lower your electric bills by improving your unit’s performance, as well as help keep it free from pollution and debris. A dirty filter may cause your unit to work harder to heat your home in the winter and cool it in the summer. A new filter can cost as little as a dollar, whereas a new HVAC unit will come with a heftier price tag. Also, consider swapping your traditional incandescent bulbs for LED light bulbs, which typically use 85 percent less energy, saving you potentially over $130 in energy costs over the life of the bulb.
Healthy Habits Healthy habits can save you money down the line, from lost work time to doctor visit copays. Start with a well-balanced diet, daily exercise and a good night’s rest. In the cooler months consider soups and hot tea. Also, make sure your home is well-equipped to keep the whole family feeling their best. Stock up on vitamins, minerals, hand soap and disinfected wipes and sprays to help prevent a cold or flu. Preventive medicines can also fend off any pending illness during allergy seasons. Disinfecting wipes make it easy to clean commonly-touched household items, such as door knobs, telephones, refrigerator door handles and TV remotes. Use disinfectant sprays to protect your family from germs and freshen up your home. Digital Coupons Coupons can save money every day, but they can be time consuming to clip. They are also often forgotten at home. However, digital coupon programs can help you avoid these hassles. For example, by signing up for Dollar General’s new Digital Coupon Program online or at check-out, you can load relevant coupons to your profile for everything from groceries and cleaning supplies to seasonal items. Digital coupons are then automatically applied when eligible items are purchased. With a bit of planning, maintenance and savvy consumerism, you can save more on the items you purchase frequently.
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job, and at age 25, made the decision to begin investing right away. She committed to saving $200 a month, every month, until retirement age. Assuming an average annual investment return of 8 percent, Amy will have amassed $702,856 by age 65. Sam, on the other hand, procrastinated. He put off contributing to an investment account until age 40. Sam tried to catch up, contributing $400 a month until he reached age 65. His investment also returned an average of 8 percent per year. However, by retirement age, Sam will only have $382,947 in his account—almost $320,000 less than the amount amassed by Amy. Over time, Amy ended up contributing $96,000 to her account, while Sam contributed $120,000 to his. In his attempt to catch up, Sam contributed 25 percent more to his account than Amy did; yet her account was worth over 83 percent more at age 65. Though the case of Amy and Sam is hypothetical, it does illustrate the power of compounding over time. However, in the real world of investing, time has another advantage. Generally, the more time you have, the more aggressive you can be with your investments. Long-term investors can ride out market cycles, allowing them to invest more aggressively and potentially reap greater returns. Track Your Expenses Balancing your monthly budget is a pre-
requisite to any sound financial strategy. Start by writing down your expenditures for one month. Make sure to include every purchase, no matter how small it might seem. Once you write down your expenses, sort them according to categories such as household, food, transportation, health, debt and miscellaneous. This way, you can see exactly where your money is going and recognize where you can make adjustments to your budget. At the end of the month, tally up all your expenses and subtract them from your income. Even if your expenses don’t exceed your income, that doesn’t necessarily mean your buying habits are under control. Your monthly budget should also include allocations for savings and investments. How much depends on your needs and goals, but many experts suggest setting aside at least 10 percent of your income to these categories. Consult A Representative A financial representative can be a valuable resource at any stage of your life. He or she can give you an estimate of the necessary life insurance coverage, as well as a realistic projection of education costs. A representative can also discuss which financial products may be suitable for your unique needs and make specific investment and insurance recommendations. To learn more, you can visit www.firstinvestors.com.
Roger Fuller, CFP® CERTIFIED FINANCIAL PLANNER™ 2043 N. Ocoee St. Cleveland, TN 37311 472-5500 www.legacyinvestments.biz • 401k/Pension Plan Rollovers • Retirement Income Planning • Fee Based Asset Management • Small Business Retirement Plans • Life & Disability Insurance • Investment Risk Management Locally Owned/Operated and offering independent advice to the Cleveland area since 2000.
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Cleveland Daily Banner—Sunday, March 15, 2015— 11
Tips on scoring the best rate on a home loan The Associated Press
Mortgage interest rates have hovered near historic lows in recent years, but change may be on the horizon. The Federal Reserve is considering increasing the short-term interest rate it controls as early as June. That could send mortgage rates moving higher again. For now, rates remain homebuyer-friendly. The national average rate for a 30-year, fixed mortgage fell to 3.75 percent last week. It was 4.28 percent a year ago. That’s good news for homebuyers, who despite signs that the economy is recovering, are always looking for ways to save. Still, landing the most affordable mortgage depends on more than getting the lowest rate. The rate borrowers qualify for hinges on several factors, including their finances, credit score and the size of the down payment they’re prepared to make. And the type of loan and the fees that come with it also determine the overall cost of a mortgage. “As rates go up it will affect affordability,” said Greg McBride, chief financial analyst at Bankrate.com. “But rate is not going to be your only loan consideration. You don’t buy a house because of low interest rates any more than you get married because of a sale at the bridal shop.” Here are some tips on how to get the best deal on a mortgage:
1. SIZE UP YOUR CREDIT Mortgage lenders consider three key factors to determine what rate they can offer a borrower: Good credit, proof of income and size of the down payment. Strength in one category can offset a deficiency in another, but having a FICO score of 740 or better out of 850 will generally qualify borrowers for the lowest mortgage rate. You can qualify for a home loan with a lower credit score, but you’ll pay a higher interest rate. If your FICO is below 740, review copies of your credit files for errors that may be weighing down your score. Consumers are entitled to a free credit report every 12 months from the three major credit-reporting firms — Equifax, TransUnion and Experian. Go to Annualcreditreport.com. The credit firms are required to respond to error disputes within 30 days, so it pays to do this well in advance of when you intend to buy a home. Think at least six to eight weeks. The ratio between available credit and how much debt you’re carrying is another key element of the FICO score. A good rule of thumb is to keep debt at less than half of your available credit. Reducing that ratio alone can often bump up your score. 2. SHOP AROUND Before you begin your home search, ask a lender to assess how much you can borrow. The lender will conduct a thorough credit and
Protect your identity and wallet (StatePoint) — With so many new methods for cyber theft, taking extra steps to protect your bank accounts and money just makes sense. Luckily, consumers and businesses are learning new methods to defend against this growing problem. Here are a few ways you can conduct your online shopping and banking business more securely: n Create unique pin numbers for your debit cards, as well as complex usernames and passwords for accounts with your banks and online retailers. Never share this information with anyone, and be sure to log out of your accounts when your transactions are completed. Conduct personal business on your home
computer or personal device as opposed to public WiFi, and always use a secure Internet connection. n Manage privacy settings on your mobile devices and apps. Review the privacy disclosures for retailers or websites to ensure you are comfortable with how they will use your personal information. Set your mobile devices and PCs to lock when they are not being used, to help prevent someone from getting access to your personal data. n Before responding to any request for personal, financial or account information, make sure you know who is asking and why they need it.
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income review and issue you a pre-approval letter, which will give a seller solid indication of what you can spend. But don’t necessarily go with the loan terms the lender is offering. This is a good time to do some comparison shopping for more favorable mortgage deals. Websites like Bankrate.com, LendingTree.com and Zillow.com offer a quick way to get a flavor for the kind of offers that may be available. Also check whether your current bank or credit union offers a better deal because you have an account there. Make sure you’re comparing the same loan types, too. How much you pay in interest and over how long a period will differ significantly between a typical 30-year, fixed-rate loan, a 15year mortgage or an adjustable-rate mortgage. When you go fishing for rate quotes do it on the same day. That’s essential for a proper sideby-side comparison, as rates can change day to day, altering what’s available. “Lenders see the market differently at different times,” said Doug Lebda, founder and CEO of LendingTree. “The timing matters.” 3. KEEP AN EYE ON FEES When you comparison shop for a mortgage focus on the annualized percentage rate, or APR. That includes the interest rate, which is the cost of borrowing the money, as well as closing costs and additional fees charged by the lender. Mortgage lenders charge fees for the mortgage
broker’s services, credit reports, a home appraisal and title insurance, among other costs. These are included in the “good faith estimate,” a form that lenders are required to provide. Keep in mind that these fees can change until your interest rate is locked in. That’s when the lender agrees to set the rate and fees for your loan at the levels they will be when you complete the transaction. 4. NEGOTIATE The various fees that lenders charge on top of the interest rate may offer you some room to negotiate a better deal, especially if you have comparable rate quotes from other lenders. Once you negotiate a reduction in those fees, they are locked in along with the interest rate, which means you’ll know exactly how much your loan will cost you. You won’t be able to negotiate a better deal on some of the other costs, including third-party fees like the appraisal, title search and taxes, however. Some lenders itemize various fees. Others may aggregate everything under one or two fees and call it an origination fee. That’s one reason it’s important to have more than one good-faith estimate when comparing offers. “You want to apply with more than one lender, so that once you get the good-faith estimate, then you can take a deeper dive on what the complete terms are, more than just the interest rate,” McBride said.
12—Cleveland Daily Banner—Sunday, March 15, 2015
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