Budgets

Make The Tax Return Count: Save It

April 24, 2016 By Twila Van Leer

A higher percentage of people are choosing to put their refund into savings.

For a short time each spring, millions of Americans have a fleeting sensation of being rich. They have their tax return in hand and must decide how best to use it. More than ever, according to Prosper Insights, they are opting to put it in the bank.

Refunds Used To Improve Financial Health

“Americans this year see refund season as a time to improve their financial health. Money saved is spending potential down the road,” said Matthew Shay, president of the National Retail Federation, which sponsors the survey.

Plans For Return

The NRF’s annual Tax Returns Survey indicated that 65.5 percent of those contacted expected a return and some 49.2 percent of those had plans to tuck the return into their savings as a means to improve their overall financial health. That is the highest percentage who are of that mindset since the NRF began conducting the survey. Other options include paying down debt or making large necessary purchases. Some 22.4 percent said they would use the return for everyday expenses and 8.3 percent looked forward to an annual splurge that they have had to bypass for the major part of the year.

Young Adults More Likely To Save

In the 18-24-year age group, the percentage of those wanting to save the return is even higher at 57.3 percent. The percentage dips to 52.3 percent in the 25-34-year age group, but that’s still more than half. These younger workers apparently see the tax windfall as a chance to build savings without diminishing their usual income.

Plans For Filing

With the mid-April deadline fast approaching, it is evident that the majority of Americans, 66.9 percent, are filing online. Almost 40 percent are preparing their own with the help of computer software. Only 14.2 percent said they have filed manually or plan to do so. Only 21.4 percent have hired or will hire a professional to get the job done, while 16.1 percent have called on a friend or relative to help with the job.

Paying Too Much For Mobile Phone Service?

April 13, 2016 By Twila Van Leer

Those staying current with the market find lower prices.

Consumer Reports estimates that 50 to 70 percent of wireless customers pay too much for the service. There are better options, the price oversight publication says.

Check For Promotions

They give the example of Michael McCormack, who has followed the wireless industry for years as part of his job. Since he also is a customer, he was able recently to take advantage of a T-Mobile US Inc. promotion offering four lines for $150 per month.

Make Changes In Service According To Needs

Yeah, but what if your job doesn’t include up-to-the-minute info on such things? The great majority of consumers don’t pay much attention, so they go on paying too much. Some of them are “loyal to a fault,” failing to make changes in their service because they’ve been with provider for a time.

But some 6 percent of the 90,000 responders to a recent Consumer Reports survey said they had changed service in the past year. The savings amounted to about $20 per month, the survey found.

Compare Prices With Other Carriers

The Consumer Reports experts said users should be paying no more than $50 per line, instead of about $100. The carriers aren’t prone to let consumers know how they can save money, said Michael Gikas, senior editor for electronics and technology. T-Mobile started a price war in 2013 and the effects are still being felt. But it’s up to the customer to check on the prices being offered by various carriers and switch when it’s to their advantage. The carriers often offer special prices to customers threatening to make a change.

Customer Satisfaction

Those who are happy with their service are the least likely to change. Others don’t want to go through the hassle of swapping providers, even if they pay more to stay put.

Verizon Communications Inc. has the lowest rate of “churn” or customer defection, in the industry. Company officials say that is because of their focus on quality service and working with customers to guarantee satisfaction. Spokespersons for other carriers emphasized their features, which they believe to be as much as factor in retaining customers. The competition is fierce. T-Mobile has moved customers to lower-priced plans and AT&T has responded to industry price cuts by not only reducing their prices but increasing data allotments.

With this kind of competition, consumers who are willing to stay current with the market are likely to find lower prices.

Save Big Bucks On Airline Tickets

April 2, 2016 By Twila Van Leer

Prices for airline tickets are all over the place. If you want to fly right and for less, become savvy about making your purchases. It is possible to save a lot – up to $300 or more per ticket – if you buy when the prices are at their lowest.

Best Time To Buy

So, how do you know when that magical moment has arrived? CheapAir did some of the footwork for you. The company monitored air travel fees for some 5 million flights in 2014, comparing the cost of bookings from 320 days in advance of the desired flight time to just one day. The research pinpointed 47 days pre-flight, on average, as the time at which fares were likely to be at their nadir.

“Window” Opportunity

From 114 days to 27 days, however, were identified as a “window” of opportunity during which it is worthwhile to shop for the best airfares. If you wait until only 14 days before you plan to fly, the price may jump by an average of $174. By that point, the airlines know you are likely to pay what they ask. Booking too early, on the other hand, can raise the price by an average of $50 per ticket, the CheapAir review found.

Book Early

Of course, there are many factors that affect prices, including dates and destinations. The research organization suggests early booking for holiday and standard vacation times in the area in which you are interested. If your travel group includes more than four people and you want to be seated together, early booking will be better. Start checking fares once a week as soon as your plans seem firm, to get a sense of the market. If you see a good price, go for it. It is more likely to rise than to fall further.

Information is available from airfarewatchdog.com, cheapair.com or kayak.com, which regularly monitor airfares.

International Travel

Fares for international travel do not fluctuate as much as those for domestic flights. If you are leaving the country, book early. Sales open 335 days before departure, CheapAir says. About 90 days before the departure date, fares start rising rapidly. If Europe is your destination, book at least 276 days in advance to get the best price. The best opportunities for cheaper tickets to the Caribbean is 144 days in advance; to Asia, 318 days; Africa, 262 days; Mexico, 251 days; South Pacific, 244 days; Middle East, 213 days; Central and South America, 96 days.

Be Flexible

Allowing yourself a little flexibility can also save money. Booking flights with connections or those that leave either early in the morning or late at night are cheaper. Tuesday, Wednesday and Saturday are the days when fares tend to be lower.

Price Drop Rebates

Many airlines and travel agencies will give you a rebate if your flight’s price drop below what you paid. Often the rebate will come in the form of credits or vouchers. Sign up with Yapta.com to receive alerts about falling prices. But be aware that some airlines will charge a big fee for re-booking a flight to a lower price. If the fee outweighs the difference in the fare price, obviously, you don’t want to consider it. CheapAir offers a $100-per-passenger credit if the price of your ticket drops. That avoids a fee for rebooking.

Finding the best fare may take some time and effort, but the savings will make it worthwhile.

Are You Spending Too Much?

April 1, 2016 By Twila Van Leer

There’s nothing left of the holidays except the memories. And the bills. And if that has been painful, it may be time to take another good look at your long-term goals and make adjustments as necessary.

Studies show that Americans are spending more than ever. The average credit card debt is $5,000 to $7,700, depending on the source of your information. Student loans, mortgage or rent payments, cars, cell phones and other electronics and other recurring debts add to the pressure.

How do you know if you are spending too much? Here’s a list of guidelines that may help you decide.

Credit Card Debt

If you carry more credit card debt than you can pay off monthly, you may be on the brink. The interest is gobbling up money that you could be using for other things.

Retirement

If you are making no provision for retirement, that’s another red flag. Though you have plenty of company – a third of working age Americans are in the same leaky boat – you may be asking for a longer working time in the future. Most experts say you need to start saving 10 to 20 percent of your income starting in your 20s to meet retirement needs.

Housing

If your housing, rent or mortgage, is absorbing more than 28 percent of your income, that’s a danger sign. And your transportation costs should not exceed 15 percent. Vehicles depreciate fast. If you are over this limit, it could be time to go shopping for less car.

Children’s Education

The working years are the time to save money for your children’s education. Higher education debt has become a major stumbling block for many young (and not so young) adults. The average student will face a $33,000 debt load when he receives his degree. Being able to take care of some of the costs up front could make the transition into a career easier.

Health Insurance

Financial disaster is fairly predictable if you don’t have health insurance. A coronary bypass can cost more than $38,500. Just thinking about this and other medical emergencies that are part of life could give you a heart attack. With new government provisions, you could be paying penalties for not having health insurance, unless you qualify for an exemption. Better the cost of insurance than the cost of the penalties.

Eating Out

If your family has become addicted to eating out, you are paying more for food than you need to. A home-prepared lunch costs about a third what they will charge you in a restaurant. Ditto coffee. Some studies have indicated 60 percent savings when you eat foods you fixed yourself.

Emergency Fund

Not having an emergency fund is asking for trouble. The experts don’t all agree on how much a cushion is enough, but the recommendations range from three to 12 months of your income total. Don’t worry so much about the total you need as the need to get started. In a pinch, anything is a whole lot better than nothing.

As a rule of thumb, financial advisors say you should spend half your income on essentials, 20 percent for debt payment, retirement and savings and 30 percent on lifestyle choices. The guideline can have some flex, but is a good gauge to whether you are making good use of your financial resources.

Bottom line: Overspending and under-saving can be disastrous. Starting early to address budget concerns may allow for a more secure and trouble-free future. If you aren’t paying attention, now is the time to start.

Money Management Tips For 30 Somethings

March 29, 2016 By Twila Van Leer

Manage money carefully in your 30's. — Manage money carefully in your 30’s.

What you do in your 30s, personal finance-wise, makes a difference to what your retirement will look like. There are some common mistakes people make in their 30s that influence the future. Here are some of them:

Over-spending for children

What you spend on cute clothes, sophisticated toys and even educational apps must be subtracted from what you expect to live on after you are through working. Better to spend conservatively and save money for your children’s college funds.

Not discussing finances before marriage

Getting married without discussing finances can be destructive. If by your 30s you have not learned to negotiate financial options, you could be in trouble. Money issues can become serious marital conflicts, leading to divorce or ongoing clashes. Learn to talk about finances and how to set monetary goals together.

Ignoring debt

Coping with consumer debt well into your middle years can be worrisome. There are always excuses to burden yourselves with debt. Children and the ordinary crises of life are among them. But ignoring debt can come back to haunt you. Budget aggressively, live thriftily, earn as much as you can and try to anticipate retirement free of consumer debt.

Keeping up with the Joneses

Over-extending for things like a house and/or cars is another pitfall. Temper your desires to have everything and to give your children everything and you’ll find yourself better prepared to make do in your retirement years. People don’t really need a huge house and several vehicles to rear happy children. Keeping up with the Joneses occupies the minds of too many of those in their 30s. Remember that the Joneses probably are trying to keep up with someone else up the ladder. Be reasonable. Buy within your means and put something aside for later.

Not leaving a will

Make out a will or set up a trust for your kids and your spouse. Save them the hassle of trying to sort things out in case of your passing. Set up a power of attorney and power of healthcare so things don’t get sticky at that point. Ditto life insurance. If you unexpectedly leave your family when they are still depending on your income or time, you need life insurance, enough to cover their needs, not just the minimum usually offered by an employer. Consider disability insurance. In your 30s, the chances of becoming disabled are greater than early death.

Ignoring investments

Re-evaluate retirement goals now and again. By 30, your income probably has increased. Re-calculate to ensure that your retirement will support the lifestyle you want to retain. Pay attention to how your investments are performing relative to those goals. Readjust if necessary to meet goals and risk tolerance. Find a capable financial planner to help you.

Not starting a college fund when kids are young

Don’t wait until your child/children are ready to go to college to prepare financially for that expensive undertaking. Put money into an online savings account toward that eventuality. Find ways, if possible, to enlarge your education savings. Some adults at this time of life, too, consider going back to school to enhance their employment possibilities. Be certain to carefully study how much you can expect to gain by more schooling before you enroll. You could be making an expensive mistake.

Not pursuing other income opportunities

Diversify your income. The days are essentially gone when you could expect to work for one employer throughout your life. If you have a hobby that can be converted to income, pursue it. Job loss is no longer uncommon and you may need fallback sources to get you from one job to another. Taking good care of your personal finances in your 30s could pay big dividends down the road. Pay attention.