Jill Russo Foster

Tips for Successful Personal Finances

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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.

Having Your Wishes Carried Out

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Personally, I have dealt with relatives dying and having to clean up the mess.  For me, each time got better with less to clean up.

  • What requests to you have – do you want to be buried or cremated, do you want a funeral or a memorial.
  • What do you want to happen to your stuff – do you want specific things to do to s specific person.  I have witnessed more fighting about little items (two people want the same thing) Take some time to think about what you have and who each item should go to.  Maybe you want to start to give the items away now.  Maybe you want to donate or sell the items.  Remember to leave detailed instructions to prevent fighting.
  • Have you updated the beneficiaries on your insurance and financial account?  Make sure to specify one or more for each account.  It makes things a lot easier.
  • What are your health wishes – do the necessary forms to have your intentions carried out, like you want.

Here’s a great article to get you thinking about what you need to have on place.

What Can You Do With $20.00

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In honor of Money Smart Week, let’s talk about cash. Do you have enough?  Are you living paycheck to paycheck? My philosophy about money is that is comes down to make choices that are right for you at this particular time of you life.  Let’s start with $20.00 cash.  What would you do?

A $20.00 may not seem to be a lot of money, but it can be.  If I gave you $20.00 bill, what would you do with it?

You could:

  1.  Deposit it to your bank account or open a bank account
  2.  Buy something
  3.  Give it to help someone or a charity to help others
  4.  Have fun by brightening your day

I bet you can think of more choices.  Your choices are unlimited.  But instead of think about one thing to do, how about thinking about multiple things to do.  You might be thinking that $20.00 is too little to do anything with, trust me it’s not.

What will $20.00 buy you:

  1.  Movie ticket and possibly popcorn too
  2.  Flowers for you or to give away
  3.  Picnic lunch on a nice spring day
  4.  Pay extra on a bill
  5.  Can of paint to refresh a room

My suggestion is to think about money is multiples.  In this case, it’s not $20.00 maybe it’s 2 $10.00 bills or 4 $5.00 bills.  Now what can you do with that?  Now you can select multiple things on your list.  Your choices are unlimited.  Instead of thinking it’s only $20, think 12 months ahead – that would be $240.  What could you do with that?

Finding extra money (no matter how small) can be put to good use.  The choice is yours – do you use it today or save it for tomorrow?

 

First Together Then Apart – Now What?

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In our last issue, we discussed whether you should blend your finances when you get into a relationship. Money will be your biggest source of friction, and having boundaries doesn’t hurt. I listed some of the different financial relationships couples choose. There are different options besides “What’s mine is mine and never ‘ours’ or “It’s all or nothing or I’m out of here.”

Sometimes your best efforts to create a life together fail, and the relationship ends. Today, we’ll discuss how to unblend your finances. Whether you decided to share all of your accounts, or only share expenses, you should separate your finances as soon as possible, because you can be sure that someone’s name is on the wrong paperwork.

Take a look at your…

  • Rent or Mortgage: Who is on the lease agreement or mortgage? It should be the one who actually lives there. Ignore that piece of wisdom and risk having your home sold out from under you.  Your name shouldn’t be on there if you don’t live there.
  • Utilities, cable, and cell phone: Whose name is on the accounts? They should be in the name of the person using them. If you don’t transfer ownership, you could have your utilities cut off without notice or worse yet – have collection accounts on your credit that you didn’t even know about.
  • Insurance: This includes car, apartment, home, life, and medical. You don’t want to be without insurance, and you don’t want your money going to the wrong person if you don’t update your beneficiaries.
  • Credit cards and loans: Do you want to have your credit affected by charges that aren’t yours, or be forced to make payments on a car you don’t use?

“But Jill,” you say, “these all sound like things that happen in a hostile breakup. We’re not like that.”  Even if your breakup is friendly, and your ex is as trustworthy and competent as a super hero’s alter ego, you still need to separate your accounts to protect yourself in case something happens to one of you. If one of you dies, remarries, or is mentally incapacitated, the law won’t recognize verbal agreements or promises. They only see whose name is on a piece of paper.

Let’s talk about verbal agreements. Let’s say the house and car loan are in your name, but you want to be nice. You don’t need them, and your ex does. Your ex has agreed to make payments, so it’s no big deal, right?

Wrong. Your credit will take a hit with the first missed, or late, payment. And, you may not be able to get a new car or house for yourself because your debt to income ratio is too high. The bank won’t take verbal agreements or divorce decrees with your ex into consideration when you apply for your loan.

Here’s something else to think about: Can you maintain your current lifestyle if you live separately?

If you end up with the house or the car, can you afford the payments? Can you pay for the utilities, the maintenance and the insurance? You may have to make tough decisions, because you could be without the things you need to live if you don’t plan ahead.

Too many people have  found themselves temporarily homeless, or had their credit ruined, or worse bankruptcy after a breakup. Don’t let this happen to you.

Finances and Money

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Finance and money is more than paying your bills on time.  Yes, this is extremely important – paying bills late may effect your credit and can cost you money with late fees / finance charges.  But there is more getting your finances organized.  Do you have the money to pay your bills each and every month?  You will want to have money for today and for the future.  Do you have goals you want to achieve?

There are many ways to deal with your finances and money and you have to find the plan that works for you.

The major parts of finances and money:

Determine your goals – what do you want in life?  Maybe a short term goal is having your month last all the way to the end of the month, or to be able to pay all bills in fulls each and every month.  What about long term goals?  How about saving for …. (insert goal such as paying for college, a car, home, vacation) all the way to financial independence.

Action plan – how are you going to achieve your goals?  Break this down into action steps, using the smart goal formula.  What is the first step you need to do to start down this financial road?  Maybe it’s starting to save … (insert amount every pay period).

Budgeting – now’s the time to put your money on the table.  How much money do you need to achieve your goals?  Start by tracking your net income and your expenses (every penny) to see where you stand.  Don’t think your have money to save, then you need to make changes to reduce your expenses and/or increase your income.  Remember that making a budget is not a one time thing, your are making a budget, review and sticking to it.

Savings money – break it down into manageable amounts and be realistic.  Your not going to be able to save $1,000 in a month, but your could start out by planning to save $20 or more per paycheck.  Automating your saving is the easiest and best way to stick with this goal – paying yourself first before you paying anything else.

Paying down debt – we all know that the finance / interest charges are the enemy of your budget.  This is money that could be used in other ways.  Don’t stick you head in the sand, we have all been there at one point or another.  Make a plan to payoff your debt – avalanche or snowball methods are way to start.

Take some time and take a look at your finances and start to deal with your finances and money to get on a path to achieve your goals.

This is very simplified and not all plans work for everyone.  Take the time to modify or find a plan that works for you and your finances.

If you want more information, please visit my website for my upcoming workshops.

 

Increasing (or Starting) That Emergency Fund

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Are you one of those people that sets a goal to have or increase your emergency savings fund each year.  As we reach the year end, did you accomplish this?

An emergency fund is something that each and every one should have.  If life hands you an unexpected expense and you really need to pay for this now, how will you handle this without that emergency fund?  That unexpected expense can be a car repair, loss of a job, a home repair and more.  These expenses typically come when you don’t have any extra money.  If it’s something you need to do immediately, without this savings you will be adding debt to your budget.  That’s where your emergency fund comes into play.  If you have one, you wouldn’t have the stress of figuring out how to pay for it.  That’s why you need to start or increase yours today!

Have you made your plan to start or increase your emergency fund? Don’t get overwhelmed thinking you need thousands of dollars now.  Nobody starts off with thousands, think baby steps to increase your emergency savings with each and every pay check. 

Steps to start your emergency fund:

  1. Open a new savings account for your emergency fund – don’t link it to your ATM. debit card.
  2. Set an amount to save each pay period – can you find $10 or more to save each pay period?
  3. Set up automatic withdrawals from your paycheck – either through your payroll dept. or with your bank.  Think pay yourself first attitude (you won’t spend it if you don’t see it).

Follow these steps to start out and increase the dollar amount at least annually. A good time to do this is when you get a raise at work – more money coming in, the more money can go to your emergency savings.  Suze Orman’s suggests that everyone needs eight months in their emergency savings.  That can be overwhelming, so let’s start with a goal of saving $1,000 in a year – you can do this as it’s on;y $20 a week.

If you haven’t started or at the level you want / need to be at, these are some great tips from WIFE – Women’s Institute for Financial Education to get you started.

Happy Savings!

When Disaster Is Coming To Your Door

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My heart truly breaks for all the people effected by these disasters.  The latest one being the California wild fires.  It seems that no matter where you live something could be coming your way.

For us here in Connecticut, we get Nor’easters and this year plenty of rain. For other parts of the country it could be a hurricane, wild fire, major storms with repercussions and so much more in the way of natural disasters.  Unfortunately, these aren’t the only situations you have to be prepared for in today’s world. Are you ready for what could be coming your way?

You need a plan and possible several plans (for all that’s involved in your life).  Here are something you may need to consider:

  1. How will I know what’s going on?  Think your power is out and many items need to be charged or do you have a manual option.
  2. Where do I go if I need to evaluate or should I stay in place?  Remember, you may have to plan for your elderly family members, young children and pets too.
  3. What are the important things to take with you or have available to access?
  4. How will I communicate to / family others that I am safe?

Just this week on the news, someone tried to abduct a young girl.  Her family had a plan in place with a “code word”.  She asked the potential abductor what the code word was.  They didn’t know, so she was able to figure this not to go with that person and run safely away.  This was great plan and it worked for them.  What’s your plan?

There are so many questions and situations that you need to be prepared for.  One place to start is with the government website.

Have You Checked This Lately?

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Every year around my birthday is the time I check my social security.

No, I am not ready to apply.  But it’s something I do annually to make sure all is correct.  Every year social security posts your income to your account (the same income you file on your federal tax return).  I like to double check to make sure mine is correct.  It’s much easier for me to check now, then to figure it out when I apply for social security down the road.  My records are easily accessible and easy to review to double check.

When was the last time you looked at your social security account?

Money, Life and Savings

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A reader asked me about how to save to purchase a home, when your money doesn’t allow much for savings.

That’s a great question. But not an easy one to answer.

We all know that saving should be a priority.  But we have monthly obligations.  So here are so general steps to achieve what you want (in this case a home).

  1. Track your spending – many people overlook this step.  Trust me this is the most important step in achieving your goal.  Write down every penny that you spend for at least a month.  Track everything from the rent payment to purchase of the newspaper.
  2. Weekly (or more often) take your tracked numbers and put it in to a budget.
  3. Analyze where your money is going and make a plan to spend less.  Even saving $5 a week will add up.
  4. Automate your savings goals and pay yourself first.  You will learn to live off less if you don’t see it available in your checking account. You may want to unlink your checking and savings (or have them with separate banks).
  5. Lastly, look into home ownership programs in your community.
  6. Check out to see if you qualify for an Individual Development Account to save for a down payment.

While it’s hard to save money each and every month.  It a necessary step in life to achieving your goals.