Jill Russo Foster

Tips for Successful Personal Finances

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Spring Cleaning Your Finances & More

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As I sit here and write this blog post about spring, I am glad it actually begins tonight.  The days are getting longer with the change to daylight saving time.

For us, it has been a mild winter with only one snow storm of a couple of inches back in January.  We have even had some record warmth days with one more coming tomorrow.  If fact, I know it’s spring is here because the daffodils and crocus are blooming.

In this difficult time, I am trying my best to stay present and not react out of fear.  For me, the best way is to accomplish something, such as learning a new skills or tackling a project.

Here are some projects that you might want to tackle:

  1. When was the last time you shredded your out dated paperwork.  Typically, after seven years papers can be tossed with a few exceptions.  Check with your tax preparer for your situation.  This is a good time to do this as many communities have a free paper shredding days coming up in April for you to take advantage of.
  2. Did you learn something from filing your taxes?  Maybe you need to make adjustments to your paycheck withholding or to save more to be able to pay the taxes you owe.  Take a look at your finances and make the changes now with your HR department.
  3. Where do your finances stand in relationship to your beginning of the year goals?  Maybe you set a goal to save a certain amount this year.  Are you one quarter of the way there?  We are about three months into the year, therefore you should be at 25% of your goal.  Are you on the path to achieving this goals? Do you need to make adjustments to your finances to achieve the goal?  Now is the time to take a look and make the changes needed, so you are not disappointed at year end.
  4. When was the last time you changed your passwords?  Update your accounts with strong passwords.
  5. How about organizing your paperwork?  Paper comes in everyday and seem to pile up.  Use this time if your home to create a system that works for you.

Stay healthy and use your time wisely this spring.

Required Distributions Are Changing – Make Your Plan

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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?

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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

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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.

Ways To Lower Your Heating Bill In The Winter

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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

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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.

Our January Rituals

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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?

Oh No, The Holidays Are Coming!

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The holidays are coming! The holidays are coming! Guard your budgets and hold onto your wallets. You might be thinking I’m crazy, but the retailers have positioned their holiday displays to disarm you of your cash, especially this year with fewer shopping days between Thanksgiving and the Holidays.

Did you shop on Black Friday and Cyber Monday?

Can you make this year different?  Can you stick to your list and not overspend?  You can if you make a detailed plan. Write down exactly what you will be buying and the dollar amount you plan to spend.

Here are some suggestions that should help you with your holiday budget list.

1. Gifts

  • How much for immediate family?
  • How much for extended family?
  • How much for friends and co-workers?
  • How much for people whose services you use?

2. Entertaining

  • How much will it cost when you host a gathering?
  • How much will you spend on hostess gifts when you attend a party?

3.  Travel

  • How much will it cost for local travel (gas, tolls, parking, etc)?
  • How much will it cost for long distance travel?
  • How much will it cost for vacation?

4. Traditions – this can be anything from an afternoon tea to a night on the town.

If you write it all down, you might realize you’re planning on spending $300-$500 on gifts for people who aren’t on your immediate family list. And hosting dinners can be expensive just because you want to put on a good appearance. Ever notice a big stain on the tablecloth and found yourself running to the store at the last minute to buy one full price?

Holiday fun can wreak havoc on your budget, but it doesn’t have to.  Now is the time to get a jump start on planning, and to put away money for the details that are important to you. Think of it as your own layaway plan. Take money out of each check, and spread out your spending, that way you won’t have buyer’s regret in January.

Doing this now may make January 2020 less stressful.

Tipping – Should You And How Much

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Do you ever wonder should you tip this person?  Personally, the answer for me is sometimes “yes” and sometimes “no”. For me it depends on the service I receive – was it Thank You!good or exceptional, did someone go out of there way and do something extra?

When I am in a restaurant, yes I tip the server.  When I use a car park service, yes I tip the attendant.  Also, I tip for personal services – hair cuts, nails, porter at airport and more.  The list goes on and on.  There are so many to tip in our lives, and even more so now that the holidays are approaching.  But who and what do you tip and how much?

And the next question for me is – how much?  Cash is always a great option for giving, but may not be the answer for your budget.  Other ideas, might be a thank you note, a call to a company to tell them what I great experience you received from someone that works there, a bouquet of flowers, baked goods, etc.

As the holidays approach,  here are suggestions from Real Simple Magazine with who and what.

Asking Those Questions

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With the holidays fat approaching and family gatherings, now is the time to assess your life.

For those of us in the sandwich generations (parents and kids), you need to think about your aging parents.  Are they prepared for what comes next?  Are you prepared for what’s next?

Where are some ideas for what you need to know:

  • What are their finals wishes
  • Do you know what assets, insurance policies, etc they have and where are those documents?
  • Do they have all the legal paperwork in place – wills, power of attorney, medical directives, etc

It’s a difficult conversation to have, but it’s extremely helpful to do this ahead of time.

Personally, my father was very forthcoming with this information, so I had it easy.  But even then, there was still a life insurance policy he must have forgotten about.  I found it through a search of unclaimed funds website for my state.  It was probably a policy that he (or his parents) had taken out years before.

I can’t imagine not having this information and knowing where things are.  What about you?  Do your kids know this information about you?

Take some time to have this important conversation when your family gets together.