Jill Russo Foster

Tips for Successful Personal Finances

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Required Distributions Are Changing – Make Your Plan

As we get older and start to think about reducing our working hours or retiring all together, it’s time to make a plan for your finances before you take the leap.  If you have been contributing to an Individual Retirement Account (IRA), 401K or other pre-tax account, you’ll need to start taking money out of your accounts. 

You might be thinking, I don’t want to take the money out until I need it.  Well, the government sees it differently.  They want there tax money since you have deferred the taxes.  Remember, this becomes taxable money and may put you in a higher tax bracket. As always you’ll need to discuss this with your tax preparer, bank / investment professional and/or attorney for what is right for you and your situation.

The old rule, is in the year after you turn 70 1/2 you were required to take a minimum distribution from your account by April 1 of the following year for the first year (then Dec 31 for year 2 subsequent years).  This rules is still true for people who turned 70 1/2 years old by the end of 2019.  Keep in mind that you can take as much as you want, but you have to take a minimum distribution each and every year after.

The new rule is part of the SECURE  (Setting Every Community Up for Retirement Enhancement) Act, passed in 2019.  Now, if you are younger than 70 1/2 by Dec 31, 2019, you can now wait until you are 72 years old before having to take the minimum distribution from your tax deferred account(s).  So you can let your money grow an additional two years.

Now, to avoid penalties with your required minimum distribution, you must take out a minimum each and every year.  To determine your amount, start with the value of your account on Dec 31 of the prior year and divide that by your life expectancy to come up with your amount.  If you take less than your are required, the penalties are ridiculously high.  They can be as much as 50%.  You have worked very hard for your money and you wouldn’t want to give it up to penalties.

Make a plan that’s right for you with your professionals, so that you get the money you need within the guidelines for the distribution.  Make sure to take at least what your are entitled.  You’ll have to pay the taxes on the distribution, but you don’t want to pay additional penalties to the government.  With this planning step, you can decide if you can afford to fully retire or if you need to keep working.

Is It Time To Switch Banks?

How long have you been with your bank?  Is it still convenient to your life?  Are you paying fees? The answer should be no to this question.  Are you earning the highest interest rate out there?

Look at your answers and take a look at your finances to make the right choices for you.  For us, last year we started to consolidate our accounts.  Rolling over our retirement accoun

t from past employers to one account.  Consolidating our accounts at two banks – one that offers totally free checking (no monthly fees, ATM fees and overdraft protection) th

at is a brick and mortar bank that is local and has convenient locations and hours that work with our lives.  The other is a virtual bank that also has no

fees and pays a high interest rate of savings accounts. It simplifies the monthly statements and it’s two online accounts.  That works for us.

Does yours work for you?  Here’s a great article from AARP Good Reasons To Consider Changing Where You Bank that will get your thinking about the different types of banks (major bank, community bank, credit union and online bank).  Which is best for you?

How To Spend Valentine’s Day On A Budget

Did you miss the Experian Credit Chat yesterday?  You don’t have to miss out.

Experian does a Credit Chat every Wednesday at 3pm EST.   Yesterday’s timely topic was Valentine’s Day on a Budget – pretty appropriate for tomorrow.

I was one of several panelist who participated in the Twitter chat.  There were some great suggestions by the panelist that may be something you are interested in for you to save money.  Here’s the link if you were unable to join.

Tax Time Is Here

Yes, it’s that time of year again – tax time.  As of January 27, you be able to file.

You can get your taxes prepared. 

You don’t want to wait until the last minute then realize you can’t find the all important paperwork to back up your tax return.

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.

Ways To Lower Your Heating Bill In The Winter

It’s winter here in the northeast, but you wouldn’t know it by mother nature.  The greater New York City area ended up with the tenth warmest January on record.  Personally, we had one snow storm and few days close to 60.  But there is still February, March and maybe April to get some winter cold, snowy weather. 

Here are some tips to save on your heating bill:

  • Can you lower your thermostat?  You can do this all the time or certain times of the day.  For certain times, think about your schedule – Can you lower it when you are out and no one is home? At night when you are in bed?
  • Do you have a fireplace(s)?  If the answer is yes, is your damper closed when your fireplace isn’t in use?  This can let cold air into your home (and warm air escape).  Remember to open the damper before you start a fire.
  • You know how nice it can feel with the sun shinning in on a bright sunny day.  It’s a favorite for our dog to lay down inside in the sun.  Well that’s really great in the day, but what about the night? Close your blind / drapes to keep the cold air out.  You can lose as much as 10% of your room’s heat during the night.
  • Check for drafts.  Yes, it’s winter but there are so many drafty spots on the inside of your home that you can fix from the inside.  Think windows and doors (sealing unused windows with plastic film),  electrical / cable outlets (outlet sealers), and check around your pipes (spray foam insulation).

These are some of the things that we do around our home to keep pour heating bill as low as possible.  There is more to do outside, before the weather gets cold.  Check out this past newsletter with those tips.

Automatic Transfers To Save More

savings-automatic

Have you struggled to save money because there never seems to be anything left over?Big surprise! We tend to spend the money we have in front of us. Getting a raise never seems to help, because that money disappears, too. There’s always something we think we need or want right now.

The best way to grow the money in your savings account is by setting up an automatic deposit from your paycheck. That way you never see it to spend it. If your company doesn’t offer this, that’s not a problem. Have an amount set up to be transferred automatically from your checking account to savings on a regular basis. The benefits here are that you are saving without any effort on your part and the money isn’t in your checking account to tempt you.

In addition, don’t have your saving account linked to your checking account on your ATM card.  Why you ask?  It’s too easy to transfer the funds without any thought.  Also, you might want to have your saving account at another financial institution.  You can access when you need the funds, but it isn’t that easy – so you will have time to think about withdrawing the funds.

Start to put your savings on automatic pilot today.

Understand Your Credit

Let’s talk about where your credit is today.  Those of you on my newsletter list should have recently pulled your January credit report.  What are you hoping to accomplish?  Do you want better credit?  Do you want to be able to get financing when you need it at a reasonable interest rate?  You can do this and it is possible.  If your credit isn’t where you want it to be, you can change it.  There’s no magic want and it can’t be done overnight (and you can pay someone to improve your score), but you can see improvements in a relatively short amount of timchoicese.

Here are some credit score tips:

  • Always pay at your bills on time.  If you don’t have the money to pay your bill when it’s due, make at least the minimum payment required, so as not to be late.  If it’s the timing that is an issue, change the due date.  Many companies will do this very easily.
  • Pay down your debt.  Reduce the total amount your owe on credit.  Make a plan to pay it down and stick to it.
  • Watch your spending.  If you can’t afford something, determine is it a need or a want.  Needs are must have such as food, clothing, shelter.  Wants are your desires, you can live without but would be really nice to have, but maybe you need to set a goal to get that want in the future.

All this over time will improve your credit and thereore credit score.  The thing to remember is the newer credit counts more than item from the past.  So there is light at the end of the tunnel.

 

Our January Rituals

It’s that time of year that we evaluate many things in our lives:

January is a month that we analyze our bills, We review all bills and if necessary, we take action.  It could be as simple as comparison shopping, reviewing overages and more.  One thing we have done was to review our homeowners insurance and make some changes.   We replaced our home’s roof last fall, that qualified us for a credit on our homeowner’s insurance.  We made some other small changes.  All that resulted in a $500 premium savings.

As we reviewed finances, we made a decision to close some accounts that were no longer used, cancelled memberships / subscriptions that we didn’t use.  We transferred some debt to a zero percentage interest rate credit card.  If you do this make sure you payoff the balance before the zero percentage expires.  We have taken the balance and divided it by the number of months.  We make that payment or more each and every month.  We updated our phone and mail preferences so that we receive less unwanted mail and phone calls.  For links to these companies visit my resources page.

While we are preparing for our taxes, we are reviewing paperwork.  That means filing, scanning and shredding.  Be sure to check with your tax preparer about what documents should be saved and for how long.

At this time of year, we update all passwords.  You never want to use the same password for your accounts – accounts should have there own unique user id and password.  Yes, it can be a pain to remember.  But if someone get access to one of your accounts, you don’t want to give them access to everything.

What do you do annually in January?

Mark Your Calendar

Have you wanted to visit a National Park?

We have been to a few and have so many more on our bucket list.  Many are free but some of the big ones charge an entrance fee.  Every year the National Parks Service offers free days and they are wonderful way to take advantage and see a park on your bucket list and save money.

So mark your calendar, here are the 2020 dates:

Monday, Jan. 20 — Martin Luther King Jr. Day

Saturday, April 18 — First Day of National Park Week/National Junior Ranger Day

Tuesday, Aug. 25 — National Park Service Birthday

Saturday, Sept. 26 — National Public Lands Day

Wednesday, Nov. 11 — Veterans Day

Enjoy