Jill Russo Foster

Tips for Successful Personal Finances

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2020 A Year For The Records Books – Part 1

2020 has been a year unlike any other – from job loss / furloughs to pandemics to hurricanes.  All of this has signaled changes in our lives, not only in what we do (or don’t do), how we live and how it affects our finances.  We must learn to adapt our finances to changing times.

For many this is a year that you started (or continue) to accumulate debt.  Not a good thing!

Let’s first talk about all the ways that you may be accumulating debt:

Not having an emergency fund.  You have heard me preach over the years about having a savings account for life’s what ifs.  This was the year that many of us needed to fall back on our emergency savings as jobs were lost / furloughed and the unemployment system was overwhelmed, and payment were delayed.  Your emergency savings was the way to get you through in these uncertain times.

Adapting to change (the new normal). As your life changes, so should your finances.  Meaning that if you have job loss / less income coming in, you need to tighten your belt and cutback on your expenses.  Answer these two questions.  Think what can I get for free that I have been paying for?  Think what can I reduce or eliminate in my monthly expenses?  Want more information, check out my past newsletter, Budgeting By The Numbers.

Eating out / take out.  Food is one of the biggest expenses in a family’s budget.  Typically, when I coach a family, it the food that is an issue with their spending.  How much is it costing you to eat out, pick up take out, grab a beverage versus bringing and cooking at home?  Track this and see where your family stands.

Reimbursable costs.  In these uncertain times, you may have more medical than other years.  Make sure to utilize all your options such as FSA and HSA accounts, in network providers, etc.  I was speaking with someone who hadn’t submitted any expenses to her FSA account.  She potentially could be leaving a lot of money on the table by not timely submitting her expenses for reimbursement.  

Check out next week’s newsletter for part 2.

 

Decluttering Your Financial Records

Since we have all been at home for months and doing things around the home, I thought I would rerun this appropriate newsletter about what you need to keep and toss for your financial records.

Here is what you can get rid of:

Paystubs – Do you have a stack of them?  You can get rid of last year’s because you have a W-2 that summarizes what you’ve earned.  Keep the W-2.  Make sure they match before shredding.

Bank Statements – If your bank gives you an annual summary or statement, then you can get rid of all the monthly or quarterly statements, but keep the annual summary / statement.

Tax Returns – Generally, you can get rid of tax returns that are seven years old or more (2013 and older) along with the supporting documentation.  However, you will want to check with your tax preparer if you:

  • bought, sold, and/or own a home
  • hold certain investments
  • received certain gifts
  • have any other special circumstance that requires you to keep related paperwork indefinitely.

In other words, check with your tax preparer before shredding your returns.

An alternative to paper files

Keeping your records on your computer is a great alternative to paper files. We had a lot of paper clutter hanging around, so I started the process of scanning my records as pdfs.  If you need a piece of documentation, it’s much easier to locate and open a single pdf than it is to search through a big, cluttered file full of paper. The best part is, that you don’t have to refile the pdf after you’re done looking at it. It’s also easier to fax or email a pdf if needed. Think of all the times you’ve needed to share information about insurances, taxes or rebates. Computer files are great to work with.  Remember to keep a back up of your files.  You wouldn’t want to lose them if your computer crashes.

Make sure to shred

Remember when I say “get rid of”, I mean for you to shred each and every document that has your personal information on it before throwing it away.  You don’t want to offer dumpster divers an opportunity to steal your identity.

Call your tax preparer to see what you need to keep and start to go through your paperwork to eliminate what you don’t need.  Happy Shredding!

Do You Need To Establish / Reestablish Your Credit?

I always get asked how someone should establish credit when I speak.  Let me give you the answer.  First whether you are establishing credit for the first time or reestablishing credit, this information is for you.

There are two main ways to establish credit:

The first option is to be a joint user with someone else.  You would have to open a joint credit card with another person.  That means that what you do (and what they do) will appear on both of your credit reports.  If you both handle your credit wisely, that will reflect on both your credit reports positively.  On the other hand, if one of you abuse your credit, that will reflect on both your credit reports as well.  This can be a great way to establish your credit.  Take a great thought when determining who the joint user will be.  You want to be sure you are a joint user and not an authorized user – trust me there is a big difference.

The second option is to open a secured credit card.  A secured credit card is where you give the credit card company a sum of money for them to give you the credit card (without risk or harm to them).  Think of this as similar to a renter giving a security deposit to a Landlord.  This is what you are doing.  You get a credit card that looks and works just like a traditional credit card, but the creditor has minimal risk if you default.  Remember, you are doing this to establish or reestablish credit.

When you need to establish or reestablish credit, you are a risky person (from a credit stand point) and you need to minimize the risk to the creditor for them to give you a chance.  Once you have proven yourself, you can open a traditional credit card (with more favorable terms) and close the joint or secured credit card.  Notice the order, I said in the previous sentence – do it in that order, please.

Keep your credit as best as possible and this will help you in the long run and give you the best possible finance down the road, but first you need to take this step to establish or reestablish your credit.

Credit FAQ’s

Whenever I do a workshop I am always asked about credit.  I have taken some of the most frequently asked questions and compiled them into this issue of my newsletter.

Why did the creditor close my credit card?  I didn’t own them anything.   Creditor will sometimes close your credit card account if you don’t use it.  If you want to have this credit card available to you, then make a purchase a few times a year to keep the account active.

My pay date and my credit card payment don’t coincide, what can I do?  You can call your credit card company and ask them to move your credit card due date to another date that works with your finances.

How to I get a copy of my credit report?  You have three credit reporting agencies – Experian, EquiFax and Trans Union.  You are entitled to one credit report from each of the three reporting agencies once every 365 days.  My suggestion is to order one credit report every four months to see your credit report three times in a year.  If you sign up for this newsletter, you will receive a credit report reminder to order your credit report three times during the year.

How do I see my credit score?  Your credit score if not a part of your credit report.  You can get a close approximation of your FICO score at Credit Sesame, Credit Karma or Quizzle (the scoring part of the three credit reporting agencies).  If you have a major credit card, most of them offer you your free credit score.

How do I know which credit card is right for me?  That’s a hard thing to answer without knowing your circumstances, but I will give you some ideas for you to select which one is right for you.  First thing to think about is how you will use this credit card.  Will you use it and pay the balance in full each and every month.  If so, then you want a credit card without any fees, because you won’t be paying any interest.  If you are planning on financing purchases with multiple payments, then you want to lowest interest rate credit card possible, to pay less in interest.

My friend was declined for credit and wants me to co-sign for him / her.  Should I?  You need to think about this carefully.  When you co-sign for someone, you are saying that you will be responsible for the payment, if the borrower doesn’t make the payment.  In addition, how they pay their credit back will reflect on your credit report.  So if they make a late payment, it will appear on your credit too.  Make your choice wisely.

What’s the difference between a joint credit card and an authorized user credit card?  Joint credit is exactly what it says, all parties apply for the credit card with their individual information are liable for what is charged (regardless of who made the charge). An authorized user is a person that you give a credit card to for them to use, but they are not responsible for the charges on the account.

What credit questions can I answer for you?

 

Understanding How Credit Works In Your Life

Let’s talk about credit.

First, loans / credit cards are when you use someone’s else’s money (borrowing).  You are receiving goods or services now that you have agreed to pay for later (either in full or with a series of payments).  This will help you to establish or re-establish your credit.  This is different from a debit card, which is using your own money and not building your credit.

Now that we have that straight, credit is an extremely important part of your finances.  It gives you that ability to purchase goods or services when you need it and pay for it later.  Sometimes life requires you to make a purchase now (even when you don’t have the funds of your own to do it now).  Last month, I came home from work to find our smoke and carbon monoxide detectors beeping – not a good thing.  It wasn’t the batteries, which meant it had been 10 years since we replaced them.  Ugh!  There was an immediate need to have the electrician come and replace all 11 smokes and carbon monoxide detectors now.  It wasn’t something we planned on in our July budget, but it needed to be done now.   That’s where credit comes in.  They were replaced and we will pay the bill in August.

Credit is something you will find you need in your life, whether it be for emergencies or planned purchases.  Having good credit will be an asset to you in your time of need. Having good credit will give you more favorable terms (lower interest rate) for your repayment terms.  The higher your credit, score the better chances of getting credit at the best terms.  Putting it a different way, your credit score is as important to your finances as your GPA is to getting into college – both numbers are an important in your life.

To have the best credit, you need to use it but not abuse it.  It’s easier said than done.  You need to use your credit and make purchases as needed, but only purchase what you can afford.  You need to make your payments on time and not max out your debt.

In my next newsletter, I’ll talk about credit and some frequently asked questions.

Simplification Month

If you have been following my posts in July, you see what we have done to simplify our lives.  This is always a priority for me.

Did any of tips inspire you to make a change?  What have you done?  What did you do that we haven’t yet?  I am always learning something new from  my readers.

I would love to hear from you.  Tell me what you’ve done.  Tell me what you like to learn more about with your finances.

Simplifying By Making Choices

This stay at home time, we have made changes to our routine.  Bills are still coming in and some are higher, but income stayed the same or was even reduced.  Something had to change.

For our electric bill that went up (even more now with summer air conditioning), we unplugged.  Think shutting the strips on the TV ‘s when not in use, unplugging the computers and printers when not is use, unplugging the kitchen appliances, and more.  By doing this we have reduce our bill by about $15 a month.  AARP has an article on lowering your electric bill during summer.

Previously, we have reduced our cable bill, by reducing it to basic TV service and internet.  Now we add whatever paid service that works for us – and only one at a time.  We have smart TV’s and can access programming through the internet apps that are free.  We use our local library’s digital collection for free.  Right now, we are using Sling TV for other channels.  In total, we spend about $110 a month total, by reducing the cord.  Hopefully, one day we can totally cut the cord!

We have also not renewed most magazine subscriptions and cancelled memberships.  For our warehouse club, I had to go into our profile and uncheck automatic renewal.  If you do this, remember to check that you are not being automatically being changed when you shouldn’t be.

Simplifying Buying When Not Needed

How many times have you gone out and made a purchase only to come home to find out that you already had the item?  This used to be us. 

Simplifying the kitchen is good thing makes what we need easier to locate when needed.  Simplifying and organizing has been our mission.  Now our kitchen cabinets and grouped together – one shelf for condiments, one for soups and other canned goods, one for pastas, etc.  Kitchen cabinets a mess. Items put on any shelf and not grouped together.

Now it’s so much easier to see what is needed before going shopping and not may unnecessary purchases (all while saving money).

Simplifying One Times Use Items

Next, we are simplifying by getting iod of items the are one-time use items.

What items are in our kitchen that we only use for one purpose.  These are taking up space and we can do without these.  Think apple slicer, we can cut the apple with a knife.  Think popsicle molds, how many times have I used them.  I can only think of one time.  We are working our way through the cabinets and drawers in our home.  How many of these items do you have in your home?

Items are piling up and will be ready to donate soon.

Simplification – Duplicates Be Gone

Simplifying the kitchen is good thing and makes what we need easier to locate when needed. spring cleaning

During this stay at home time, we have begun getting rid of duplicates.  Really, how many potato peelers can one kitchen need?  Not to mention the hamburger flippers, ladles and more.

We have begun going through the process of cleaning out the kitchen cabinets and drawers.  I can’t believe how much we have accumulated over the years.  Maybe, its time to pretend we are moving and do a deep cleaning? Think about all the money we have wasted with buying these items!  It’s time to think save money instead of buying another item.