New Years Resolutions for a Fiscally Healthy Year

New Years Resolutions for a Fiscally Healthy Year

Getting to a place in your life where you consider yourself fiscally healthy can seem like a challenge. The key is to take bite-size pieces and accomplish them one small habit at a time. Let’s take a look at some of the steps you can make in the new year.

1. Set up a Budget

Budgeting sounds like such an adult word, right? It doesn’t have to be boring. Writing out a budget is simply telling your money where it will go each week or month. You know that you will have rent or a mortgage bill to pay, so plan for that. Aside from set expenses you know you will have each month, you should also plan for things that you know will eventually come up. Do you only pay for your car insurance twice per year? Often this is cheaper, but set a designated amount aside each month rather than scrambling to come up with a full six-month premium at one time.

2. Credit Reports

This is your financial track record. If it’s not so great, you ultimately pay more for things like car loans and home loans. Showing potential lenders that you sometimes struggle with your funds generally means that you will be charged higher interest rates, which means more money coming out of your pocket each month. Take a look at your credit report. Clean up any errors you find and then start working on paying off debt and building a more positive record.

3. Automated Savings

It’s hard to miss money if you never see it in the first place, right? Take advantage of this by setting up automatic transfers with your bank account. This can be to transfer funds directly to your savings account, or you can take it a step further by automating some of the regular bills you pay each month. You know that expenses like the electric bill are going to come through each month, so set up an automatic transfer to get it paid on time and avoid costly late fees.

Clearing up your finances, or simply improving on what you have already cleared up can only help to set you up for success in the future. Start with these small steps and build on them over the next 12 months.

Calculating How Much Home You Can Afford

Calculating How Much Home You Can Afford

When looking at blogs about buying a home, you’ll often find them discussing how you can budget to afford a new home. The problem with many of these blogs is that they fail to mention how you can actually figure out what you can afford. I just recently published a blog about budgeting for a new home and did the same thing. As mentioned in that blog, one of the first parts of figuring out how much you can afford is by understanding that homeownership is made up of several costs outside of your mortgage payment. So what are these additional costs? 

Property Taxes

As with many things in life, you have to pay taxes on the property you own. Property taxes are different everywhere and tend to vary from .3% to 2.5% of the value of your home annually across the United States. If you want to get an idea of how much property taxes you’d pay for your potential new home, you can usually easily get an idea about your area via the Internet as well as by asking your real estate agent. A property’s historical property taxes are also disclosed in listings and can give you an idea of how they may fluctuate over the course of your time owning the property. 

Private Mortgage Insurance

While not everybody has to pay for this, private mortgage insurance can be a potential cost when buying your new home. When making a down payment for your mortgage, it’s often recommended to put at least 20% of the overall cost of the home down and then pay the other 80% as your mortgage. If you can’t afford to put down 20%, you’ll likely have to pay for PMI. Putting down less than 20% makes you out to be more of a risk to lenders, resulting in them requiring you to pay for an insurance policy to ensure that if you miss a payment, the insurance policy will get them their money. PMI typically costs between .5 and 1% of your overall mortgage annually. 

HOA Fees

Another one that some homeowners don’t have to worry about – Home Owner’s Association fees. If you’re buying a home that is part of the HOA, you’ll typically have a monthly cost of anywhere between $100 to $700 depending on numerous factors. 

Property Insurance

When taking out a mortgage you’ll be required to have property insurance. The premiums for this insurance are yearly like many of the other costs and the prices will vary depending on your location. They often take the value of your home, the liability coverage, and then any other risks in your area (such as natural disasters), and then determine a price from there.

Maintenance and Utilities

Having some money put aside for any potential maintenance your house might need is always a good idea. It’s often recommended to put away about 1 or 2% of the overall yearly cost of your home. On top of that, you’ll have to pay for utilities such as electricity, water, garbage, sewage, and the Internet, among other things. Be sure you’re prepared to include these in what are usually monthly or quarterly bills.

Once you’ve got an idea of how much each of these additional costs will come out to, you can easily find a calculator on the Internet that will allow you to punch all of the numbers in and get an idea of how much you’ll have to pay each month as a homeowner.

This article was originally published on VictorNotaro.com

Budgeting To Buy A Car

Budgeting To Buy A Car

Buying a brand new car is not cheap. They typically cost thousands of dollars, and you’re more than likely not going to be able to cover the entire cost of your new vehicle right away, meaning you’ll have to do some sort of payment plan. This means you’ll likely have to budget in order to make sure you can afford not only a down payment but each payment that follows that. Budgeting for something so expensive can be difficult, so here are a few tips to help you budget for a new car.

Set A Price Limit

The first thing you’ll want to think about when budgeting for a new car is what your price limit will be. Cars vary in price and depending on what you want, they can get to rather high price points. When looking at your finances, be sure to think about how much you’re actually willing to pay so you can begin budgeting. A good rule of thumb is to avoid paying monthly payments that are more than 15% than your gross income. While this may end up eliminating your more desired car options, there are likely plenty of great options available more in your price range. 

Think About Additional Costs

One of the unfortunate parts of buying a car is all of the additional costs that come with it. You’ll want to do your research and consider extra costs such as sales tax, registration and title fees, car insurance, and gas. All of these fees will add up over time, so leaving them out of your budget for a new car can end up costing you in the end. Registration and title fees can be rather significant but you usually only have to pay the title fee once while the registration only has to be renewed on a yearly or bi-yearly basis, depending on where you live. Other fees such as car insurance and gas are much more frequent payments, so it’s important you can afford these extra costs.

Don’t Forget Repairs!

Finally, it’s important to think about any potential future repairs. Since you’re buying a brand new car you hopefully won’t have to worry too much about anything breaking for a while, but it’s always better to be safe than sorry. Getting your car repaired can be expensive, and when you go to get your car inspected there’s always a chance your mechanic will discover that several expensive things need to be repaired in order to pass. This can take a chunk out of your wallet, so always remember to put aside extra money for potential repairs.

This article was originally published on VictorNotaro.com

Traditional vs Roth IRA: Which is Best for You

Traditional vs Roth IRA: Which is Best for You

No matter how much you may be making, setting aside a portion for retirement is always a smart move. But one decision your current income–among other factors–does affect is whether you’re better off saving with a Roth IRA, or a traditional retirement account. Making the right choice means evaluating your present financial status, while also considering what your earnings might look like in the future. Here are a few tips to help clarify your ideal IRA.

Compare Your Current and Estimated Future Income

The Roth IRA does have income limits, although the majority of those just starting to save for retirement aren’t likely to exceed them. There are no income limits for traditional IRAs, however income (and whether an employer provides access to a 401(k) or other retirement accounts) will determine if contributions to a traditional IRA qualify as fully or partially tax deductible.

Consider When You’d like to Pay Taxes

A key distinction between Roth and traditional IRAs is whether taxes on savings are paid as you contribute, or after you start taking money out. Traditional IRA contributions are tax deductible, so your current tax bill will be lower. Roth IRAs contributions aren’t deductible, but earnings accumulate tax-free, while traditional IRs collect taxes upon withdrawal of funds.

If your earnings are high right before you retire, you may move to a lower tax bracket once you stop working. In that case, it could be beneficial to deduct taxes ahead of time via a traditional IRA. If you anticipate being in a record high tax bracket when taking out withdrawals, then a Roth IRA might be best. Those that can’t fathom what their earnings may look like in 30 years might prefer splitting contributions between both IRA types. In all scenarios, total contributions must remain within acceptable limits.

Know the Early Withdrawal Policies of Each Type

Making a withdrawal before age 59 and a half will cost a 10% penalty in many cases, though some exceptions apply. Withdrawal ahead-of-time from a traditional IRA, however, and you’ll pay taxes at your present rate. Early withdrawals from Roth IRAs are tax free, so long as your first withdrawal comes at least five years after the initial contribution. Money taken out before the  five year-mark may be taxed, or penalized 10% depending on the circumstances of the withdrawal.

Look into Required Minimum Distributions

Turning 70 means that those with traditional IRAs will have to take required minimum distributions. This could be detrimental to any who aren’t already living off of their retirement savings, as mandatory withdrawals will limit or prevent the account from growing further. In addition, owners older than 70 and a half can no longer make contributions to traditional IRAs.

Roth IRAs don’t have any rules mandating a minimum distribution (as long as they aren’t inherited). Savings are free to appreciate throughout the entirety of a Roth IRA owner’s life, and contributions still can be made over the age of 70 and a half.

This article was originally published on VictorNotaro.com

Budgeting Tips For Buying A Home

Budgeting Tips For Buying A Home

Owning a home is a wonderful thing, but actually buying one can be an expensive process that you may not be prepared for. There’s so much more than just the actual buying of the house when it comes to the financial part of buying a home. You have to think about the price of the home itself, the real estate agent, anything that may need to be fixed within the house, furniture and much more. This can all be a lot, so the best course of action is to budget for your new home. Read on for a few budgeting tips for purchasing a home.

Save For A Deposit

When you purchase a home, you typically aren’t required to pay the entire price up front. That’s what mortgages are for. While you don’t have to pay the entire price, you do usually need to put down a deposit. The typical deposit is a minimum of 20% of the overall price of the house, so depending on how expensive your new home is, that can be a pretty penny. If you’re not able to make a 20% deposit, you can sometimes make one that’s lower and still get a mortgage, but will likely have to also pay for private mortgage insurance between .5% and 1%.

Think About Expenses Beyond The Mortgage

While being able to pay your deposit and then your mortgage every month is important, you’ll want to take additional expenses into account as well. Homeowners have to think about the utility bills they have to pay each month, property taxes, and any repairs they may need to make on the home – whether they’re done as soon as the home is purchased or if a surprise repair needs to be done later down the line. Homeowners also can’t forget about homeowner’s insurance, which is just as important as all of the other expenses.

Be Realistic

One of the most important things if not THE most important thing is that you need to be realistic when shopping for a home. While you might want a large home, and maybe you can even afford it, the actual upkeep of the home can be difficult to manage. Think about how that property might handle flooding or large amounts of snowfall. If the house is older and needs some fixing up, you’ll want to think about if you can afford to pay for someone to fix things up or if you can do it yourself – in terms of expenses, skills, and time. Lastly, if you purchase a larger than average space, you’ll have my rooms to fill, which means more money on furniture and the like.

This article was originally published on VictorNotaro.com

Budgeting Tips During a Pandemic

Budgeting Tips During a Pandemic

As the world is thrown into a new normal due to a pandemic, it’s easy for many aspects of our lives to fall out of whack. For the most part, many citizens have lost their jobs and are struggling to obtain unemployment benefits. In these times of health and financial uncertainty, it’s important to know how to budget during a pandemic.

Create a Long-Term Financial Plan

Creating a long-term financial plan is a great first step to tackling budgeting during a pandemic. In times of uncertainty, it’s important to put some sort of plan of action into place, especially when it comes to your finances. This can be done with the help of a financial advisor, but it’s also possible to do yourself.

When creating a long-term financial plan, consider your must-have expenses such as rent, groceries, utilities, and a savings fund for emergencies. Also keep in mind your short-term and long-term financial goals such as paying off debt, saving for retirement, or sending your child to college. This will help you form a budgeting system to keep you on track.

Put More Focus on Savings

When budgeting in a pandemic, the most important financial area to focus on is your emergency savings. It’s imperative to have a failsafe to fall back on. Avoid paying off debt for now and focus more on making savings. The best goal to aim for is three to six months’ worth of expenses put away into savings. Not only will this help you create a more sustainable budget, but if things were, in fact, to get worse, you have savings to rely on.

While paying off debt is important, during times like this it needs to take a backseat to savings. Don’t completely blow it off, but remember to always be prepared for the worst. Having savings could help prevent even more debt in the long-run.

Keep an Eye on Your Spending Habits

Being stuck at home in quarantine can bring out habits that not many people knew they had or would have. Some find they are saving money from not going out as much and are no longer paying for transportation. However, some are finding their bank accounts lower than ever before. Although this can be widely due to unemployment, many times it is also because they are not monitoring their spending habits.

For example, while they are spending less on transportation, they could be spending much more now on electricity usage, groceries, renting movies, online shopping, and much more. To combat this, it’s important to keep a very watchful eye on your spending habits by meal prepping with your family, limiting expenses for online shopping, and always sticking to your budget.

This article was originally published on VictorNotaro.com

Becoming Financially Stable as New Parents

Becoming Financially Stable as New Parents

Becoming a parent is a big step in life with an immense amount of responsibility. It can be an incredibly happy time for new parents, but just as equally stressful. With hospital bills, diapers, formula, and starting a savings account for the child’s future, it is an overwhelming time. To make it a bit less stressful, new parents should follow these tips for becoming financially stable:

Plan Ahead of Time

While babies can sometimes come as a surprise, it’s important to plan for a new baby as much as possible. If you and your partner are ready to start having children, be sure that it is something you are ready to take on financially. Consider not only how much it will cost to prepare for the new baby’s arrival, but for the rest of their lives. It’s important to pay off outstanding debts, create a savings account, and evaluate if your family budget can handle a new member.

Think About Insurance

Becoming a parent means always putting the child’s care first and preparing for their future. In order to really prepare for their future, it’s important to consider one that you won’t be a part of. Even though it is scary to think about, life insurance is imperative to have in the tragedy that one parent dies. By having life insurance, your child and your spouse will be able to have a stable financial future in such a tragedy.

Plan For College

As any parent will tell you, it’s never too early to start planning and saving for college. Every year tuition is becoming more and more expensive, not including the costs of books, food, and room and board. Even before you are changing dirty diapers, start the college savings fund for your child. Especially if you are planning on having more than one child, starting this early will get you a head start on their future higher education.

Becoming a new parent is a big step in life which is why it is vitally important to be financially stable. In order to give your child the best life and future possible, make sure your finances are in order. With strong financial stability, having a new little member of the family will be more about joy and less stress.

Small and Simple Ways to Save Money

Small and Simple Ways to Save Money

Saving money can sometimes be difficult. Even though you want to start a savings account or dedicate more money to be put away for a rainy day, life has a tendency to get in the way. We find ourselves spending a little too much on groceries or spontaneous buys which could have gone into a savings account. Luckily, there are small and simple ways to save money:

Choose Your Spending Days

One of the most popular ways to save money is by creating a budget and determining a spending limit. It’s also important to determine a certain day dedicated to spending money. Choose the best and most convenient days of the week that you will allow yourself to spend money. On the days that you are allowed to spend money, you will be able to make better decisions on what to spend it on which helps you have better control of your spending.

Have a Separate Account for Fun

Once you have your spending allowance for fun and hobbies, put that money in a separate account. It’s easy to determine a budget, but harder to stick to it. The best way to stick to your spending allowance for fun is by keeping it completely separate from all of your other money. This way you have less of a chance to spend too much or dip into your savings account for needless spending.

Enroll in a “Save the Change” Program

One of the easiest ways to save more money is by constantly having money flowing into your savings account. A great way of doing this is by not even realizing your putting money away. There are many banks and mobile apps that will automatically round up every purchase you make to the nearest whole dollar and puts the remainder into a savings account. It may only seem like a little, but it will start to add up over time.

Buy Groceries Online

Many people tend to think that buying groceries online is a luxury they can’t afford, but it can actually help you save money. Sticking to your grocery budget and only putting the essentials in your cart can be hard. By aimlessly wandering through the grocery store and picking up random items you think you want. When ordering online, it’s easy to look at the total as you go and take out the nonessentials.

Budgeting Tips for Your Next Vacation

Budgeting Tips for Your Next Vacation

Whether you are traveling as a family, couple, or by yourself, it’s important to establish a vacation budget. Before you set off on your next big adventure, make sure all your financial affairs are taken care of. Taking a vacation is a big money commitment, but budgeting correctly for it can make a huge difference. Here are a few budgeting tips to make sure your next vacation goes smoothly:

Start Budgeting Early

Before taking off, start budgeting for your trip early. When setting up your budget, balance your total costs based on where you’re going, how you plan to get there, and what you’ll do when you are there. If you’re on a budget while on vacation, plan a trip that won’t cut through too much of these spending areas. Think of how much you would like to spend in each of these areas and be realistic about how much you can afford.

Transportation Spending

Many people tend to only budget for the major transportation of getting to their destination. They usually save enough for the ticket for their plane, train, or bus ride. When budgeting for a vacation, be sure to keep in mind all your transportation needs. When you arrive at your destination, chances are you won’t be able to walk everywhere. Do your research and come up with an estimate of how much it costs for taxis service or public transportation in that area.

Food and Beverage

There needs to be separate funds set aside for food and drinks. Often times when you are in a new place or culture, there are new foods and cuisines to try. Bills at restaurants, bars, and other eateries will really begin to rack up, especially if you are traveling as a family. Create a spending limit for dining and stick to it. In order to help yourself stay more on budget with food and beverage, consider taking snacks made from home with you.

Spontaneous Fun

No matter how much you plan it out, there will always be activities you didn’t plan on doing. Instead of skipping it, set aside a budget for spontaneous activities. That way when a fun new adventure is in front of you, you’ll be able to afford it. Budgeting may sound boring at first, but it’s the best way to ensure you have a fun and memorable vacation without having to worry about your finances.

Saving Money as a Single Parent

Saving Money as a Single Parent

Whether you are a mother or a father, being a single parent can be the greatest challenge. With all the obstacles and responsibilities of two parents, they need to handle by themselves. One of these responsibilities is handling the family finances. As a single parent, it can be hard to save money since you do not have a partner to contribute. Take a look at these helpful tips that can lead to better family savings:

Meal Prep for the Week

A small life hack for single parents that can save them loads of time and even more money is meal prepping. Meal prepping is preparing food for the week or for the next couple of days on one or two days of the week. For example, by prepping your food for your family on a Sunday for the rest of the week will encourage you to not go out to eat when you don’t have time to cook or overindulge. It’s also a great way to plan healthy meals, save money by buying in bulk, and spending more time with your family and less time cooking.

Create a Spending Budget

The cornerstone of strong finances is a well-balanced budget. To create a budget, you need to know where your money is going. In order to manage your monthly spending habits, it’s imperative to create a guideline for spending on essentials from housing to transportation, food, child care, and more. By having this in mind to go by, you’ll know where you can cut back and help put some extra cash into your savings.

Take Out Unnecessaries

In this day and age, there are a number of amenities that are luxuries disguised as necessities. When you have created a budget and understand where all your money is going, it’s important to identify all the unnecessary spending. For example, swapping out your morning coffee from Starbucks to making it at home. Or instead of having multiple online streaming accounts like Hulu and Netflix, keep it to just one. By making these small adjustments, it can lead to major savings.

Automatic Savings Transfers

One of the best ways to build up your savings is by having automatic transfers. This transfer should be viewed as another monthly bill. Once you know how much money you can save a month, have that amount taken out of your account and put into your savings automatically each month. This puts you on a strict road to a better financial future and can help you save money much faster.