Jill Russo Foster

Tips for Successful Personal Finances

You are here: Home / Archives for Jill Russo Foster

In case of emergency…

I did a talk last week about financial organization. We all know that we need to keep our financial paperwork in order but sometimes we forget the basics.

The first step is to know what is in your wallet or purse. If I were to take your wallet away from you right now, could you tell me what’s in it? All of it? Most people can tell me most, but not each and every item.

Why is this so important? If you lost your wallet or purse, could you quickly call to cancel your credit cards and replace each and every item? Probably not! Did you know that the sooner you cancel your credit cards, the less liable you are for purchases made in your name?

Take an inventory of everything in your wallet or purse. Start with your credit cards. I suggest that you make a copy of the front of each card. Make sure to write the toll free customer number for each card on the copies you made (that number is found on the back of the card). You should also make copies or keep records of other items in your wallet that you will need to cancel or replace. That could include your driver’s license or any club cards you might have. Make copies of those as well, or create a list. Then keep these copies in a safe place where you can easily find it. I’ve spoken before of having two copies in case of a home disaster like a fire or flood. You might want to keep one copy in a locked home safe and one copy in a safe deposit box at your bank.

Keeping a record of what is in your wallet or purse is one step towards financial organization. Do it this week to be prepared in case of an emergency.

A Child Finds Money on the Sidewalk…

Here’s a trivia question: What would a child do if he found money that didn’t belong to him? (The answer is at the bottom of this post.)

Unclaimed Money: Are you missing any money?  Would you know if you were?  Banks and financial institutions do find themselves in the strange position of having to deal with what appear to be abandoned checking or savings accounts. Unlike the child in our trivia question, banks don’t have to ask themselves any moral or ethical questions, they just have to follow the law. If the account is unclaimed for three years, they are required to turn the money over to the State.

Sometimes “unclaimed money” isn’t lost at all! For example, let’s say you opened a savings account to store the $1,000 your grandmother gave you when you graduated high school. You assumed you could just let the money sit there earning interest until you were ready to use it. You would be wrong. Interest going into a bank account is NOT considered activity. After 3 years, your money would be transferred to the state.

To avoid having your money declared “unclaimed”, make a small deposit or withdrawal from your bank account annually.

Savings accounts aren’t the only accounts that can be categorized as unclaimed. Make sure that you cash checks you receive in a timely manner – even paychecks can be considered unclaimed money. Safe deposit boxes also fall under unclaimed money – make sure you access that safe deposit box at least annually.

To find out if you have any missing money, go to www.unclaimed.org and check each state that you have lived in to see if you have unclaimed money.

Answer to my trivia question:  According to a NY Times article, 64% of children who found money either tried to return it to its rightful owner or turned it in to authorities.  And, 82% of children who hadn’t found money said they would to the same. That makes you feel good, doesn’t it?

The Winning Prize Scam

Right now, people are struggling with their finances.  Some are looking for easy solutions and that is where the scammers come in.

The  “winning prize” scam typically starts with a notice that you have won a sum of money.  This should be your first clue, since you probably haven’t entered any contests.  If you follow the instructions, you will eventually receive a check in the mail for a few thousand dollars.  You are instructed to deposit that check into your bank account and wire a “prize fee”  to the sender.  For example, if you get a $3,000 check, you may be asked to wire $2,500.  Do you think you’ve won a $500 prize?  Think again!

After you send your money, you will discover that the check they sent you is no good.  Not only are you out the money you paid them, but you are liable for all the bank fees associated with depositing a bad check.

I can’t tell you this strongly enough – when you win something, you will NEVER have to pay fees.  You should never be asked to give up any money in advance or ever.  A legitimate win will be subject to taxes – but those would be paid with your tax returns.  If you are contacted, be cautious and never give any money in advance to receive a prize.

Do-It-Yourself Identity Theft Protection

Have you received a letter from your bank or credit card company lately telling you that your personal information may be compromised?  We’ve been getting these letters on a regular basis at my house. If you read further, you’ll see that these companies are trying to sell you identity theft protection for a monthly fee.  It’s a good idea to guard against identity theft, but buying protection is not the most cost effective plan for your personal finances.

You can monitor your own credit and stop identity theft for minimal money. Simply put a credit freeze on the credit reports offered by the three major credit reporting agencies.  A credit freeze prevents anyone from accessing your credit report (including you). If someone is trying to open a new credit account in your name, potential creditors will not be able to access your credit report. Creditors don’t give out new credit without it, so the thief will be stopped in his tracks.

How do you freeze your credit report? Contact all three credit reporting companies and pay a small fee to  freeze your credit report.  No one, including you, will be able to access your credit.  That means if you want to finance a car, you will be denied since the potential creditor cannot access your credit.  Don’t worry – you can unfreeze your credit for a fee when you need to.

Bottom line: The cost to freeze and release the freeze is substantially cheaper to you than the $10 plus dollars a month for credit monitoring.  Credit freezes can stop new accounts from being opened by thieves even when they have your personal information. The only effort required on your part will be planning for your  upcoming credit needs so you can freeze and unfreeze your credit accordingly. How often do you need to open a new credit account? Most of us do it very rarely, so it’s easy to plan ahead.

Why a big tax refund is a bad idea

Why is a big tax refund a bad idea? I’ve given you three reasons below. Let me know in the comments section if you can think of more.

Loaning your money for free to someone who doesn’t need it. What if I told you that you were going to loan someone $2,000 this year, and you weren’t going to charge interest. On top of that – you are going to wait a year to get it back, and ask for it in writing. Are you laughing at my question? If you are getting a tax refund this year, that is exactly what you have done! You loaned the government a portion of your paycheck every week, you didn’t receive any interest on that loan, and now you have to fill out a tax form to get it back.

Putting your money to work. The average tax return in 2008 was $2,683. So, you are not alone in doing this, but you should make sure it doesn’t happen again. When you see your tax preparer, ask him to adjust your withholdings so that you will not get a huge refund. I know you don’t want to owe $2,000 in taxes. Instead, aim to have the correct amount of taxes withheld. This way, you can have that extra money earning interest in your savings account, or saving you interest by going towards extra payments on your debt. That is how you make your money work for you.

You get less money with a tax refund. Are you worried that you won’t have the big check every spring for that special purchase? You might assume that a tax refund is a good savings plan. It’s not – good savings plans pay interest. Put the extra money in your own savings account instead. Divide your tax refund by the number of times you get paid each year. Then, have that amount automatically deducted from your paycheck and put into a savings account. If you want to have $2,500 saved in a year,  that means you need to save about $48 a week. You are probably thinking that you don’t have an extra $48. Trust me; you will not miss money that’s not in your paycheck. Besides, if you’ve adjusted your tax withholdings, you’ll have more take-home pay.

The high price of instant tax refunds

It’s that time of year: holiday bills are arriving and you’re not sure you have the money to pay them. If you live on the east coast, you can add in unexpected snow removal costs. Where will you get the extra money? You might think that your tax refund is where you’ll get the money you need. That’s a good thought, but don’t sign up for an instant refund.

Some tax preparers or quick cash companies will tempt you with faster returns. They give you part of your tax refund ahead of time as a loan. Don’t do it! This is one of those money drains that isn’t worth the cost. All loans have fees and interest. With quick income tax return loans, the fees and rates can be outrageous. Let’s face it: companies who lend money are in the business of making money. It wouldn’t be worth their time and effort to give you a cheap loan. I strongly urge you to skip the quick cash and speed up the refund process with these three suggestions.

  • If you are expecting a refund, then by all means get your taxes done and filed as soon as possible. The quicker you file, the quicker you get your money back.
  • You can speed up the process by having your tax preparer file your tax returns electronically, which can save you the mail time.
  • Have the refund direct deposited to your bank account and again save the mail time.

If you do these three things, you can have your refund back in your hands in weeks. Then you will have the money you need and keep more of it in your pocket.

Budgeting for 2011

Have you made a resolution to stick to your budget in 2011? So far this year, I have overspent in my budget category of snow removal I am sure I am not alone What do you do when it’s only January 20 and you have overspent? You have some tough decisions to make.

You have several options If you decide that you want to continue having your snow removal done by someone else, you could find another way to pay for this expense You would have to give up something else that would free up the money for more snow removal You could do it yourself, if you are physically able You can access your emergency savings account Remember that savings account that I have been asking you to build up so you have one year’s worth of expenses to spend on life’s “what if’s” now could be one of those times.

Budgeting is only as good as your projections and sometimes we project too little That is why you need to be flexible with your budget, so that when you have unexpected expenses or more costs than you have planned, you can deal with it Overages in one category mean shortages in another Determine what you can lessen to have the extra money for the overages Build that emergency savings for those overages so you have a cushion to fall back on Because you never know how much snow we are going to get in a season.

Increase Savings and Reduce Expenses in 2011

What are your New Year’s financial resolutions? Is it to save more? Reduce your expenses? We all have good intentions in January, but what happens to them in the coming months?

If your resolution is to save more, start by saving a small amount each week The amount should be something you think you can easily do without a problem If you are thinking that there is no money left over after you pay your bills to do this, you are thinking about this backwards Savings needs to be your first priority and not your last Take the amount you can afford to save weekly and take it off the top, before you pay your bills This way, you will ensure that this will happen Lots of people don’t keep their resolutions because they goals are too much for them.

If you have never succeeded in making this resolution in the past, start small By small I mean start with $5 per week If you can do this easily, then increase the amount for next month Then increase again and again until you get to an amount that you were originally thinking you wanted to save in the past This is much easier for you to accomplish with baby steps than if you said I want to save $100 a week and then fail to do so You are building your success with small steps and sticking with your resolution.

To reduce your expenses, think baby steps again Look at one category of spending and figure out a way to reduce that category by 10% Once that is done, go on to the next.

Resolutions / goals are something that you can do any day of the year There is no need to only do them in January of each year Remember, anything that you want to accomplish will take effort on your part.

Paying the Holiday Bills

Now that the holidays are over, it’s time for the bills to start to come in This time of year is when you need to be extra careful about your finances I know that this is a resolution that many of you made on January 1 You need to be carefully checking your statements (both your bank and credit card accounts) for accuracy In my experience, this is when the most errors occur So check those statements to your receipts, balance your checkbook and immediately call to dispute any discrepancies Look for unfamiliar transactions that you are unsure of Sometimes a charge will appear with a different company name than the store you made the purchase from Call to get more information to determine if it’s your transaction The longer you wait, the less protection you have.

In addition, now is the time of year to read the inserts in your statements You know those pieces of paper that you automatically toss Banks and creditors will inform you about changes to your accounts increased fees, new requirements etc You need to know about these before they take affect and it’s too late to do anything about them.

Be proactive with your finances by staying on top on what is happening with your money, will benefit you in the long run You will be able to make choices that are right for you and possibly save you money on fees Wishing you a happy and prosperous new year.