Goals, Personal Goals

Financial Goal Setting Reminders

Productive Goal Setting

We are already 3 weeks into the New Year, and we hope everyone is off to a great start! Since this month’s ‘theme’ is productive goal setting, we wanted to keep you on track by reminding you of a few things.

Priority Goals

should be short-term needs; priority two goals should be long-term needs. Short-term wants comprise the third priority, and long-term wants are priority four. In this way, you can address your highest priority financial goals first, and better focus your financial resources for the future.

Write Your Goals

Write them and put them somewhere they can be seen daily. Revisit your goals regularly, keeping in mind that as your budget changes, your goals might also. Share your goals with your family so you can stay motivated together as you reach for the financial goals you have set before you.

An Encouraging Verse

“I returned, and saw under the sun, that the race is not to the swift, nor the battle to the strong, neither yet bread to the wise, nor yet riches to men of understanding, nor yet favour to men of skill; but time and chance happeneth to them all.” Ecclesiastes 9:11

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    Credit Cards, Debit & Your Credit Score, Goals, Investing, Money Management, Personal Goals, Saving

    Setting Good Financial Goals

    S.M.A.R.T Financial Goals

    If you are keeping up with the Newsletters, you know that last week we decided to open up the New Year by presenting you with the “S.M.A.R.T.” tactic; a great tool that you can use as a guide when setting your goals for 2011

    The aim is to set good financial goals.  You will want to write them down, consolidate and refine them, prioritize them, make them measurable, and keep them visible.  Set good goals and keep them in front of you—you’ll be surprised at how much more productive and focused you’ll feel as you start living with a clearer purpose.

    The second common denominator of all good financial plans is a spending plan (i.e., budget). You may not like it, but it’s an absolutely essential tool for everyone.  Without a spending plan, you cannot implement saving and investing strategies because you don’t know if you have any extra money to save or invest.

    Keep an eye out for next week’s newsletter about priorities!

    Financial GoalsTip

    Don’t procrastinate!  Just sit down and get started.  It does not have to be perfect, nor does it need to be complete.  You will find things along the way that will need to be added and/or changed; that is ok. The most important thing is that you make a set PLAN.

    “Failing to plan, is planning to fail.”

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      Credit Cards, Debit & Your Credit Score, Money Management

      Repairing your Credit – Five Trouble-free Guidelines

      Repairing Your Credit

      Repairing your credit is something we all have to do from time to time. It may appear like a hard task to do, but the fact is that it can be fairly easy when you follow these five simple guidelines to repairing your credit and getting back on track for a future with easy credit options.

      Pay your bills on time.

      A full 35 percent of your credit score is made up of your payment history, meaning it matters more than anything else. Hence, it is incredibly important that you pay back your bills on time and do not let them get late, or go to collections. One late bill can send your credit score spiraling down. This is why it is so important that if you are repairing your credit, to pay your bills. Even if it means minimum payments, you should pay your bills as soon as you can without letting them be late.

      Pay and Transfer

      Pay off your high interest credit cards and transfer balances to your low interest credit cards. Interest can sink you when you are trying to pay your credit cards, so transfer your high interest balances to low interest cards to save money. As well, if you have more than three credit cards, close out the high interest cards to get yourself down to two or three credit cards, no more.

      Credit Report

      Get a copy of your credit report. Understanding your credit report is key to fixing your credit. It will show you what to fix and what to not worry about. On top of that, it will help you see if you have any problems with errors on your credit report, something that affects 75 percent of all credit reports. Repairing a credit report error can drastically fix your credit, so make sure you get your credit report.

      Don’t spend.

      The smaller amount you spend on credit, the less you have to pay back and the easier it will be to start cutting down on your debt. You should try and limit all your everyday expenditured and create a budget so you can observe yourself and see accurately how much you need to allocate each month to pay off your debts in a year or so.

      Financial Accountability

      Talk to someone about your debt. A credit counseling company will take all your debts and put them into one loan that is easier for you to pay back. A credit counseling company will help you learn more about your credit and how to fix it. You won’t be so worried because you will have these companies on your side, helping you fix your credit. Just be careful of debt consolidation and debt counseling companies that are not legit and only want your money. Do your homework.

      These five tips can help you repair your credit and get yourself out of a debt spiral. Use these tips and before you know it, your credit will be back up above 650, and you will be living a much easier life again.

      Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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        Budgeting

        Finances and Your Options

        Payday Loan Facts

        You have probably seen the ads on the radio, television and the internet. You may have even received ads in the mail. They refer to payday loans, which can come at a high price.

        If you are not sure that you are ready to take a payday loan, there are other options for you to think about in regards to handling your finances. Payday loans are great given specific circumstances, but taking them out frivolously can be dangerous. If you are having problems with your finances in general, a payday loan will not help you there.

        Check cashers, finance companies, and others are making small, short-term, high-rate loans that go by a variety of names: payday loan, cash advance loans, check advance loans, post-dated check loans or deferred deposit check loans.

        Typically this loan involves a borrower writing a personal, post-dated, check to the lender for the amount he/she wishes to borrow. The company gives the borrower the money minus the fee.

        Fees that are charged for payday loans are usually a percentage of the face value of the check or a fee per amount borrowed, for instance for every $50 or $100 loaned. If you happen to extend or rollover the loan, you will pay extra fees for each extension.

        Under the Truth in Lending Act, the cost of payday loans – like other types of credit – must be disclosed. Among other information, you must receive, in writing, the finance charge (a dollar amount) and the annual percentage rate or APR (the cost of credit on a yearly basis).

        These loans are great for specific circumstances. This would include emergency bills that are otherwise going to be charged late fees or to prevent certain services from being turned off.

        Perhaps you are going to be charged huge late fees to a creditor if you don’t make your next payment. But this next payment falls in-between your paychecks. If this is your situation, then it is wise to know that you can pay the loan back when you get your next payday.

        Otherwise, if you are too broke to pay your bills, then you need more financial help that a payday loan can give you. Auto repairs are another situation when a payday loan can help. But unlike traditional lenders, payday lenders don’t need to know why you are borrowing the money.

        Alternatives to Payday loan

        There are other options. Consider the possibilities before choosing a payday loan:

        When you need credit, shop carefully. Compare offers. Look for the credit offer with the lowest APR – consider a small loan from your credit union or small loan company, an advance on pay from your employer, or a loan from family or friends.

        A cash advance on a credit card also may be a possibility, but it may have a higher interest rate than your other sources of funds: find out the terms before you decide. Also, a local community-based organization may make small business loans to individuals.

        Compare the APR and the finance charge (which includes loan fees, interest and other types of credit costs) of credit offers to get the lowest cost.

        Ask your creditors for more time to pay your bills. Find out what they will charge for that service – as a late charge, an additional finance charge, or a higher interest rate.

        Setting a Budget

        Make a realistic budget, and figure your monthly and daily expenditures. Avoid unnecessary purchases – even small daily items. Their costs add up.

        Also, build some savings – even small deposits can help – to avoid borrowing for emergencies, unexpected expenses or other items. For example, by putting the amount of the fee that would be paid on a typical $300 payday loan in a savings account for six months, you would have extra dollars available. This can give you a buffer against financial emergencies.

        Find out if you have, or can get, overdraft protection on your checking account. If you are regularly using most or all of the funds in your account and if you make a mistake in your checking (or savings) account ledger or records, overdraft protection can help protect you from further credit problems. Find out the terms of overdraft protection.

        If you need help working out a debt repayment plan with creditors or developing a budget, contact your local consumer credit counseling service. There are non-profit groups in every state that offer credit guidance to consumers.

        These services are available at little or no cost. Also, check with your employer, credit union or housing authority for no- or low-cost credit counseling programs.

        If you decide you must use a payday loan, borrow only as much as you can afford to pay with your next paycheck and still have enough to make it to the next payday.

        Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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          Economy

          The Failing Economy and Slow Job Growth

          Economists and Economic Predictions

          A panel of economists on Tuesday predicted several more years of pain for the United States, agreeing unemployment will remain high far longer than 2014, when White House and congressional economists have predicted a jobs improvement.

          The panel — including Nobel Prize winner Paul Krugman, Harvard’s Martin Feldstein and Goldman Sachs chief economist Jan Hatzius — agreed that policymakers have failed to adequately stimulate the economy, and that more needs to be done.

          “It’s going to take many years before you get back to anything approaching full unemployment, and 2014 is probably too early,” said Hatzius, speaking at a conference held at the Newseum in Washington. The conference was sponsored by the left-leaning think tank and advocacy group Demos.

          Some on the panel predicted unemployment will tick upward before it heads lower. And Feldstein predicted that housing prices could fall even further, especially as more underwater homeowners give the banks the keys to their homes, increasing the supply of available ones.

          “When that happens, it hurts consumer confidence and it makes it much harder for people to move where the jobs are,” Feldstein said. “Then, I think (consumers) have to stay and suffer it out, and can’t move where they have a better chance of getting a job.”

          They talked about how the sputtering U.S. recovery compared with the long recession that Japan suffered through in the 1990s.

          “In fact, we’re not doing what the Japanese did, we’re doing it worse,” Krugman said, pointing out that the United States has a larger trade gap, a bigger surge in unemployment and is more quickly facing an exhaustion of the political will to act. “In the long run, we’re going to look at Japan’s lost decade as a success story compared to what we’re going through.”

          Federal Reserve Board

          The economists also suggested that the Federal Reserve Board could do more by buying government debt or other investments. The Federal Open Market Committee meets on Nov. 3 to discuss potential actions that could help the economy.

          But the panel predicted the Fed won’t have the will to take “risks” and buy enough Treasurys to make much of an impact on the economy.

          “The numbers needed to really move the needle a lot are very, very large, and there will be a natural bias toward caution,” predicted Hatzius.

          The group also debated tax policy as a means of fiscal stimulus. Feldstein talked about the importance for Congress to extend tax cuts before the end of the year, when 2001 and 2003 era tax cuts are slated to expire.

          “This is not the time for a tax increase,” said Feldstein, who said that doing nothing to extend tax cuts “seems like a disaster scenario.”

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            Retirement & 401k

            401(k) Facts You Need to Know

            Your Financial Future and Your 401(k)

            Millions of Americans threaten their financial future by failing to roll over 401(k) funds when they change jobs. Too many people see leaving a job as an opportunity to get their hands on the cash they’ve been saving for retirement, but you can do irreparable harm to your financial future by doing so.

            When you change jobs, you’ll have to make a decision about what to do with the money you’ve contributed to your employer’s 401(k) plan. There are three major options: leave the money in your former employer’s plan, take the money out, or roll it over.

            401K Options

            If your vested 401(k) funds total $5,000 or more, your employer is legally required to allow you to leave your funds in the company plan if you choose to do so. This may be a good option for you if you’re happy with the performance of your employer’s plan, it’s a bad time to cash out (you’ve lost money during a market slump, for example), or you have a waiting period at your new job before you’re eligible to roll your funds over into that plan.

            Your second option is to take the money out of the 401(k) plan and not roll it over into another qualified plan. If you elect this option, your 401(k) provider will first deduct 20% and send it to the IRS to be applied to your income taxes when you file your return at the end of the year. The taxes deducted may or may not be enough to cover your tax liability. For example, if you’re in the 10% tax bracket, you’ll probably get some money back, but if you’re in the 28% tax bracket, you may owe an additional 8%. If you’re under age 59 1/2 (or 55 in some circumstances), you’ll also owe an additional 10% in early withdrawal penalties.

            401K Withdrawal Penalties

            Here’s how the above scenario may play out: You’re in the 28% tax bracket and are under 55 at the time you leave your job. You decide to have your 401(k) balance of $100,000 paid directly to you.

            $100,000 – 401(k) Balance
            – 20,000 – 20% Withholding
            – 8,000 – Additional taxes (28% less 20% withheld)
            – 10,000 – 10% early withdrawal penalty
            $ 62,000 – Balance

            IRA Facts

            In addition to the federal income taxes listed above, you’ll also have to pay state income taxes on the amount you withdrew, leaving you with approximately 57% of your hard-earned money (assuming a 5% state tax rate).

            You can avoid paying current taxes and penalties if you roll the money into your new employer’s 401(k) plan or an IRA. This scenario may look like this:

            $100,000 – 401(k) balance
            -0 – Taxes withheld
            -0 – Additional taxes
            -0 – 10% early withdrawal penalty
            $100,000 – Balance

            You can set up an IRA at most banks or financial institutions or directly with most mutual funds or publicly traded companies. In most cases, this can be done easily online or via mail. Be sure to request that the money be sent directly to the new 401(k) plan administrator or IRA administrator to avoid incurring taxes. Rolling the entire amount over to another tax-deferred plan should provide you with significantly higher retirement funds, especially if you are many years from retirement. If you take the money out of a tax deferred plan, you lose the power of compounding the full amount over the years left until retirement, possibly costing you hundreds of thousands of dollars.

            So, if you’re faced with the decision of what to do with your retirement savings when you change jobs, remember: don’t throw away your 401(k)!

            Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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