Jill Russo Foster

Tips for Successful Personal Finances

You are here: Home / Archives for Jill Russo Foster

Should you pay off your credit card debt with a mortgage refinance?

By

In our last Quick Tips, we talked about refinancing your mortgage. I hope you did your homework. If you decided that refinancing is right for you, you may be tempted to pay off your other debts by financing them into your mortgage.

Should you do it? Follow these steps to find out.

List all your debts

If debt is a problem for you, take a closer look. Make 5 columns:

Column 1: Write down the name of each creditor (credit card companies, auto dealership, bank, hospital, etc.)

Column 2: Write down why you took a loan or used a credit card. This will help you see how you came to be in debt. Were these essential expenses like a car or a hospital emergency? Or, were these items you could have saved for, like a vacation, clothes, or furniture.

Column 3. Write down the interest rate.

Column 4. Write down the current payment amount.

Column 5. Write down when it will be paid off at the current payment rate.

I know that this can be scary, but you need to know. Congratulate yourself for doing this. This is a huge step forward.

Why is it important to really look at your debt? If your debts just disappear into your mortgage, you could forget where they came from. Most people who consolidate their debt this way will have credit card debt again in just a few years.

Refinancing may not be the answer, but knowing how and why you spend will help you stay out of debt in the long run.

Consider the downside of consolidating your credit card debt into your mortgage.  Credit card debt is unsecured, so you would be taking unsecured debt and betting your house on it.  When you have credit card debt and can’t make payments, that’s a problem – but, your creditors cannot take your home. On the other hand, if you can’t make your mortgage payments, then you could lose your home in foreclosure. If you increased your mortgage loan in order to cover credit card debt, you could end up with a larger house payment – one that you can’t afford! That’s why I don’t recommend refinancing your unsecured debt into a mortgage.

Consider the long term outcome when refinancing secured debts into your mortgage.

Secured debt is a physical object that can be repossessed / foreclosed if you don’t pay: it could be a car, or even a home equity loan or line of credit. Here are three questions you should ask before making your decision:

1. If you combine your mortgage with your home equity will this mean you need to pay mortgage insurance? Mortgage insurance is added when the total amount of your mortgage is equal to, or over, 80% of your home’s appraised value. That will increase your monthly mortgage payment.

2. Will you need the home equity line in the future? It will be difficult to get a new line in these economic times.

3. Is it better to pay off your debts yourself, and have a tight budget for the short term? Or combine them with your refinance and have a bigger mortgage in the long term?

Think long and hard about what you put into your new mortgage. Consult with your tax preparer for an objective opinion.

Is It Time To Refinance?

By

Are you tired of hearing about low mortgage interest rates?  You’re not alone. Many of us have been thinking about it for a while now.

Here are some questions you need to think about before you make your decision:

  • How long are you planning on staying in this home?
  • Why do you want to refinance your mortgage? Are you looking to shorten the term and/or lower the interest rate?
  • What are your current mortgage terms (balance owed, years remaining, etc)?

Are there other options for you to consider which may better suited for you that will save you money:

  • Have you spoken to your current lender?  You may be able to modify your existing mortgage and avoid the closing costs.
  • Have you spoken to your current lender?  Do they offer faster payment schedule (bi-weekly mortgage payments).  You would be paying half your mortgage every two weeks, therefore making 13 total payments in a year.

There is lots to consider for your individual situation and you need to take the time to do what is right for you and your situation.  Talk to your professionals that know your finances (tax preparer, accountant, financial advisor, etc.) for their thoughts.  If you decide to move forward with the refinance, rates are low.

 

Spring is here!

By

I can’t believe how fast this year is going!  Here in Connecticut, we had lots of snow over 25” in February alone (that’s a lot considering last year, we had one storm with about 3” for the entire winter).  March has been a roller coasterspring cleaning, we’ve had some warm days and some bitter cold days.  But spring is coming!

With spring, it makes me think of two things – cleaning and planning projects.  Cleaning is just a deeper cleaning – moving furniture to clean behind, washing windows, etc.  As for the planning projects, that’s more complicated.  As a homeowner, there is the annual maintenance you have do to – clean the yard, gutters and see what winter has done to your home that needs fixing.  For us, we take on a project or two each year.  Last year, was replacing the backyard fencing.  The year before, was replacing the roof.  Doing things proactively is easier for us and helps with the budget too.  What will this year’s project be?  We are still deciding.

What does spring mean to you?

Goodbye 2020, hello 2021!

By

2020 was a year for the record books. This past year has brought many issues for many people, from job losses, reduced wages, not to mention healthcare issues.  If this past year didn’t convince you that you need an emergency fund, I am not sure what will.

For us personally, we have had job furloughs and reduced hours – therefore less income.  Luckily, we have an emergency savings to help us out.  In addition, we took on part time weekend jobs for additional income.  What about you, how are you surviving?

Our goal for 2021 is to get our finances back on track – replenishing our emergency savings and eliminating debt.  Fortunately, we are back at work and earning income (and we have kept the additional part time work).  So here is our plan:

  • We continue to automatically save a portion of each paycheck.
  • We have made a plan to pay down some debt we accumulated.

Notice that we are doing both at the same time.  Personally, I don’t believe that all your money should go to paying down your debt while not saving anything.  If you have an unexpected expense, then what will happen?  You will go into more debt.  That’s why I believe in doing both at the same time.

For us, we are using the snowball method to payoff the debt we have accumulated.  What is your plan to get back in track in 2021?

Who handles the finances in your relationship?

By

I met a woman who asked me some questions when she found out what I do for a living.  This subject is one that all of you should be aware of and in honor of Valentine’s Day, I wanted to discuss joint finances.  You wouldn’t believe how many people this affects.

Are you married or in a relationship with joint finances? Even when couples share accounts, living space, or property, it’s typically one person who handles the finanlove and moneyces in a relationship – paying the bills, savings, investing, etc.  But the other person shouldn’t be left in the dark.  Think about your future, I have meet many who have no clue on how their finances are handled and then something happens and they now have to take charge.

Because this is your joint future, both should know what is going on and how to access the information at any time. The definition of the word joint is defined by Merriman-Webster as “united, joined, or sharing with others”.

Both of you should be making decisions together, understanding where you are today with your money and where you want to go for the future. You should both know the names of your banks and investments and how to access these accounts, especially if you use online accounts.  Think of it this way, if the person handling the finances is not able to do it – what would happen?  Could you put food on the table?  Would the utilities be paid to be kept on?

Remember, too, that your children can see how the money is handled in your relationship. What you do, and don’t do, shows them just as much as what you tell them.

I also believe that each person needs to establish credit in their own name and if you are listed as a co-owner on the assets you should also be listed as a co-owner on the liabilities. What that means is that if you own a home (your name is on the deed) you should also be on the mortgage.

Many partners are left out of the finances.  If that’s you, and something happens to the person who handles everything, you are going to have a difficult time.  You may find that the bank accounts that you thought were joint are not.  You may find that you thought you owned the home you live in, but you don’t.  You may find that you need to open a credit card or take out a loan and you have no credit in your name.

All this happens more times than I can count.  If this describes you, then you need to have a conversation today with your partner. You need to what know what assets you have, what liabilities you owe and have a plan for moving forward to achieve your goals.  The first step is having this conversation.

It is tax time.  Are you ready?

By

Here are a few things you need to know:

2021 IRS tax deadlines:

January                                15 Final estimated tax payment due for 2020

15 IRS Free File service opens

19 IRS Free File for military families opens

February                               12 IRS begins to process 2020 tax returns

April                                       15 Deadline to file your 2020 taxes

15 First estimated tax payment due for 2021

June                                       15 Second estimated tax payment due for 2021

September                            15 Third estimated tax payment due for 2021

October                                 15 IRS deadline for extended 2020 tax returns

You may be able to get your taxes prepared for free AND from a reputable source.

There’s help if you’re a senior or have a low to moderate income.

Go to www.IRS.gov to find information on the VITA program (Volunteer Income Tax Assistance), the TCE Program and AARP Tax-Aide.

There you can learn

  • If you qualify for the program
  • What to do bring to the meeting
  • Locations near you

You don’t have to be afraid to use these services. The tax preparers at these programs are certified volunteers who work under a qualified supervisor.  The location near me is at the local community college and is supervised by a CPA and Chair of the Accounting Department.

Each location will have different hours, so check before you make the trip. Some will take appointments and some are walk-in only.

If you qualify, you may save yourself a few hundred dollars. You’ll get the work done at no cost to yourself and a trained preparer can catch details that might net you a bigger return.

 

Stimulus Checks

By

Did you receive your stimulus check?  If you do (or did) receive a stimulus check, are you wondering if you must pay the IRS taxes on it?  Is it considered reportable

income?

Here is a great article that will answer your questions.

As with all tax questions, please check with your tax preparer for your individual situation,

Start The Year Off Right!

By

NewYear-resolutions

Each year there are several things I do in January to make a fresh start of our finances for myself and my family.

I take the credit cards out of my wallet and put them in my copy machine. Why do I do this?  So, I’ll have up-to-date information on my cards in case my wallet and/or phone is lost or stolen. If you want to do this, too, make sure to spread your cards out on the paper so you’ll have room to hand-write the contact phone numbers found on the back of the cards. This serves a few purposes:

  1. You won’t have to go online or search past bills for contact numbers in case you need to cancel those cards in a hurry.
  2. You will know exactly which cards you need to call on, and,
  3. You’ll remember to take the credit cards off the copier.

I set a new file for 2021.  This includes my accordion multi-pocket folder for this years’ tax information.  If I am organized at the start of the year, I will be all set for the accountant at year end.  For last year, I am ready to give our accountant all the tax information so that I can file early.  (This is a good idea to file early, just in case someone steals your identity and files a false return).

I shred our pay stubs when the W-2’s come in. Check to make sure they agree first! (Yes, there are still companies that use paper pay stubs)

We review last year’s bills. We really like to save money on everyday expenses so we can afford the things we really enjoy. So, we look at how we’ve spent our money in the past year to see if we can make any improvements.  In the past, we have deregulated our electric, lowered our cell phone package, and cut out TV channels we don’t watch.  We have made choices about what subscriptions to keep and what not to renew, keeping only the most useful magazines and memberships.

January is a month we plan our extra spending. These are the expenses that aren’t in the usual monthly budget but are essential to our standard of living. If you want to plan your extra spending, here are some examples and tips:

  1. What do you want to do this year for fun?  We usually already have a vacation or two in mind.
  2. What big events are taking place for your family or circle of friends?  You usually know a year in advance if someone is planning a family reunion or getting married. Be sure to factor in travel costs.
  3. What home projects do you need or want?  With this past year’s weather, you may be thinking its time for that major improvement to your home.  Last year, we replaced our roof.

If you need to spend money to have it, then it’s worth planning ahead.  It’s so much easier and less stressful to have the money saved than to try to figure out where can to get the money at the last minute.

Happy Thanksgiving!

By

 

With Thanksgiving around the corner, I wanted to express my gratitude to all my readers.

It’s time for change and I have made the decision to stop writing this newsletter.  I have enjoyed all the readers feedback, suggestions, and the friends  I have made over the many years.  But it’s time for me to move on.

Wishing you a Happy Thanksgiving and a Joyous and Healthy Holiday Season!