Like many families we need a bit of help organizing our
finances to make sure we are in the best financial health, based on
our own personal situations. I’ve put together some tips that will help you and
possibly some areas where you can find money within your budget and spending
habits to save and maybe even invest for your future.
- Savings, we all try but many are not able to save even 5% of our annual salary each year. Having an automatic savings that is forced is a great way. I know you may have heard this before but it’s important you pay yourself before you pay anyone else. By having an automatic savings deduction from your payroll or from your checking account that goes directly into a saving account is key. If you are not doing this, try it. Even if it’s a small amount it will add up over time. Having a nest egg for emergencies is critical, set your goal for one -two months of reserves. What I mean by this is add up all your monthly liabilities, times two and this should be your immediate goal to save and have on hand for an emergency or life changing event.
- Analyzing your 401K, you should be watching your
401K for performance and make sure you are experiencing gain and not losses, if you are losing money, contact your account manager and make some changes to your investments. It’s crazy not to do this, remember if you don’t, no one will. Another tip on 401K is your contributions, are you over funding your 401K based on its performance. Maybe you could be investing the same money in a different type of account with a higher return. Also is your employer contributing to your 401k, hopefully they are to some degree but if not you might be better off with an IRA or ROTH IRA.
- Insurance Policies are another great way to
invest and can be added to your investment portfolio and paid with money from an over funded 401K. Life insurance policies have great rates of return and grow in cash value over time. If you already have a policy go over it and make sure you have enough coverage. Over time we increase our liabilities and networth so it is important to increase policies values. Insurance is a great way to invest long term and protect your family.
- Budget is another thing you need to analyze. Many
don’t even have one, so first it’s important to establish a budget. If this is
you then please take some notes. Having a plan is critical to financial
stability. Having no plan can be the reason you never have money and live from
pay check to pay check. Many banks like BofA, Wells Fargo and others have spending reports you can run now that reflect your spending habits, use these reports to help you
see where you can cut back your spending. This will help you free up money you
didn’t think you had. You can also go through your bank statements to track
your spending if reports are not available at your bank. Understanding where
your money is going is the first step to controlling your budget.
- Mortgage Analysis, it's important to look at the financing on your home and any other property you own. Rates and programs change frequently.Do you have the best mortgage available that will save you money and reduce your interest paid each year. If you are paying mortgage insurance (MI) this step is critical to review even twice a year and a must do each year. The value of your home is most likely increasing by 6% to 10% annually. This is why it's important to keep track of values because once you reach 80% loan to value you can request your MI be removed from your monthly payment. If you have an FHA loan you will need to refinance into a conventional loan to get your MI removed.
- Start getting your documents in order for tax time. Remember to save your last paycheck stub for 2017, it will come in handy if you want to start your tax preparation early.
Roxy Redenbaugh
ACMC Loan Consultant
Mortgage Coach
Branch Manager
NMLS #269926
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