Daily Habits for Financial Wellbeing

October 18, 2023

Our daily habits play a huge role in our lifestyle. Some of our daily habits are so ingrained that we don’t even think of doing them – brushing our teeth, washing our hands – these things we do on a daily basis shape us and set us up for positive growth. Or, if they’re bad daily habits, they hold us back from reaching our goals and our true potential.

When it comes to your finances, what are your daily habits? Do they support your best self and help you achieve your goals? Taking a closer look at our daily habits can help identify what holds us back or what helps us grow. Here are a few positive, daily habits you can start to integrate if you’re feeling like you could use some support.

Read the news and daily stories about personal finance and investing. Checking in on personal finance news and updates everyday (or every couple of days) is a great way to stay informed about the latest news and developments in the financial world. The environment we are in has a big impact on our lives, and that goes for our financial wellbeing as well. News about changing interest rates, economic indicators, or financial products, can keep you in the know about what’s changing and how it affects your financial world. Being “in the know” with current financial news can also help you identify potential risks to your investments or financial wellbeing, and could even identify potential opportunities for growth and prosperity. Understanding broader economic trends is crucial, and paying attention to current financial events and news, can help you adjust your financial plans, such as investments or career decisions, in response to changing economic conditions. It’s all information that helps you make better financial plans for yourself and your family. Don’t forget, it’s important to consume financial news in a balanced way. Too much information can lead to anxiety or overly fearful decision making. It’s also important to critically evaluate the sources of your financial news to ensure they are reputable and unbiased.

Track your spending. Tracking your daily spending is such a beneficial habit for financial wellbeing! For starters, it forces you to be more aware of where you are spending your money. Many people underestimate how much they spend on various expenses, and tracking helps provide a clear picture of your financial habits. It’s also a crucial step in the budgeting process too. By truly understanding your spending patterns, you can create a realistic budget that aligns with your financial goals. This allows you to allocate funds to important priorities, like savings and debt repayment. You can identify problem areas, prevent overspending, set more intentional financial goals, find ways to save more and allocate your money in different ways, and this habit specifically leads to long-term financial wellbeing. It’s a powerful daily habit that shows yourself that you are locked in and commited to your own financial health.

Check your bank accounts and review recent charges. This goes hand in hand with tracking your spending, but checking in on your actual accounts (banks and credit cards) is another important daily habit to enlist in your life. Besides all of the reasons above, this habit helps you to know that your accounts are secure. No fraudulent behavior can be overlooked if you’re someone who checks in regularly. This habit will also help you avoid overdraft fees or any insufficient funds charges, as well as helping you maintain your healthy credit score, it aids in debt management, helps with your peace of mind, and will help you make smart decisions and plans for the future. Keeping a close eye on your money is a major factor in our overall financial wellbeing, and it shouldn’t be skipped!

Stick to your budget and bill payment schedule. Keeping a strict budget doesn’t always sound fun, but it is the backbone to our strong and positive financial daily habits. A strong budget keeps you in control of your financial life and allows you to prioritize the most important expenses and goals. Having a system set up for paying your bills (whether that is automation or a designated day each week to sit down and pay your bills) is a helpful way to reduce stress and anxiety and will give you peace of mind knowing that your system is working and keeping you on your path to success and wellbeing. It can allow you to focus your energy on all of the other important areas of your life, because you know you have a strong hold on your budget and your bills. If you share finances with a partner, a budget and bill payment schedule can facilitate open communication and collaboration on financial matters. It helps avoid conflicts and ensures both people are on the same page.

Stop and reflect before you purchase something. Control your impulse spending. First and foremost, stopping to think before you make a purchase enables you to check your budget and see if you have the funds available for the purchase. This practice ensures that you don’t overspend or dip into savings meant for other financial goals, which is a huge part of sticking to your budget. Reflecting on a purchase prompts you to consider its priority in your life. Is it more important than other financial goals or needs? This helpful practice can assist you in making informed choices about where your money goes. This simple habit of reflection can lead to a better understanding of personal finance. You learn to evaluate the financial implications of your decisions and in turn, you start to create a sense of financial responsibility in your life. A solid daily habit for sure!

Reserve eating out for special occasions and make most of your meals at home. Before the pandemic, I used to eat out at restaurants maybe two or three times a week. Now, I save dining out for special occasions and some weeks I don’t dine out at all. I’ve created the habit of cooking at home throughout my entire week. I plan my dinners so that they can create lunches for the next day. I plan my meals so that I don’t overspend at the grocery store. This simple, daily habit saves me a lot of money. This habit has a huge potential for cost savings for you as well since restaurant and takeaway meals are typically more expensive than homemade meals. You can control your food-related spending more effectively by reducing the temptation to dine out impulsively. Shopping for groceries more efficiently and strategically also helps you with meal-planning, which helps you reduce food waste, and helps you stay in control of your health and diet. This is also a strong practice for lowering our impacts on the environment, compared to the production and transportation of restaurant and takeout meals. Reducing waste associated with takeout containers also helps the environment. I love this daily habit and I have noticed major positive impacts on my food spending and my overall financial wellbeing.

Only use your credit card if you can afford to pay for the goods or services in cash. This is debt prevention step one! If you only charge what you can afford to pay off, you avoid carrying a balance and incurring interest charges. This is crucial for maintaining good financial health. Responsible use of your credit card and paying off your balance in full and on time demonstrates financial discipline, which can lead to a higher credit score, and we know that a good credit score can result in better borrowing terms and lower interest rates on loans and credit cards. A big win for personal financial wellbeing.

The ways we live and the daily habits we create can have major implications on how we budget, how we save, and how we live our lives. Building habits that create positive change in our lives takes a lot of discipline and dedication. It requires us to step up to the plate and not be afraid or avoidant. Making better financial decisions is something we can do everyday in small ways and big ways. The impacts can last a lifetime! What are some of your helpful daily habits that make you feel in charge of your financial life? Image found here.

Reselling and your taxes

October 6, 2023

In today’s digital age, you no longer need to organize a traditional garage sale to part with your unused belongings. With so many apps and online marketplaces at your disposal, simplifying the decluttering process and earning some extra cash has never been easier. This trend has made buying and selling items more convenient for everyone. However, many are left wondering about the proper way to report these transactions on their tax returns. Let’s discuss!

When you sell goods online or in person for a profit, it is crucial to ensure that you report both your sales and income to the IRS in order to fulfill your tax obligations on any earnings. This year, numerous online marketplaces and digital payment providers have initiated the practice of automatically reporting your financial transactions to the IRS, even if your sales amount to as little as $600. This new development serves as a strong incentive for individuals to maintain good records of their sales and ensure compliance with tax regulations.

There are a lot of different ways you could categorize online sales. This part can be very nuanced! But we can break these online sales into four common categories: The One-Off Sale, Hobby Sales, Collectibles and Investments, Online Business Sales.

The One-Off: Let’s say you purchased a toaster oven for $250. You used it for a couple of years and now your new apartment doesn’t have enough counter space for it. You sell the $250 toaster oven for $50 on Facebook Marketplace. In this version, your sales are generally nontaxible. You can’t deduct the item as a loss on your return, but you also don’t have to pay taxes on it either.

The Hobby Sale: You started making pottery! This is something you do for fun and not for profit, even if you sell something every once in a while. Income generated from a hobby is subject to income tax but not self-employment tax. Through 2025, you can’t claim deductions for expenses related to your hobby in order to offset your income.

Collectibles and Investment Sales: This would be someone who engages in the buying and selling of items for profit without operating a full-fledged business. For example, let’s say you occasionally purchase art or antiques to resell in the secondary market with the expectation of their value appreciating over time. You should report any capital gains you make on Schedule D of your tax return. If you held the item for less than a year, you’ll be subject to regular income tax on the gain. However, if your ownership exceeded one year, you’ll incur capital gains taxes, which generally have a lower rate than your standard personal tax rate.

Online Business Sales: If you regularly sell items online, either as an online-based business or part of a larger, brick-and-mortar retail shop, you must report all of your online sales on your business tax return or on Schedule C of your personal tax return. You will be subject to regular income tax on your earnings, but you have the opportunity to deduct your business-related expenses and offset your income with business losses if your business doesn’t generate a profit. Apart from income taxes, it’s important to note that you are also required to pay self-employment taxes on your business income.

What is a 1099-K? A 1099-K form shows the total dollar amount of your online transactions for the year. If you sell on multiple online platforms, such as Shopify or Etsy, you will likely recieve a 1099-K from each of these platforms detailing the total sales made during the year. These platforms are also referred to as payment service entities (PSEs) and they will report your online sales to the IRS using the 1099-K form. Through 2022, PSEs were only required to issue 1099-Ks when total transaction volume reached $20,000 or 200 transactions. Starting in 2023, the threshold changes to $600, meaning many more online sellers will receive 1099-K forms going forward. You should report all of your taxable online sales to the IRS, regardless of whether a 1099-K is issued. However, when the IRS receives a 1099-K, they can see how much you transacted, which should motivate taxpayers to keep their books organized and to track and report all income.

What about apps like CashApp and Venmo? If those transactions are personal, sent between friends and family, they don’t need to be included as business transactions. Unless you are using these apps to make a business transaction. If that is the case, you’ll want your account to be set up as a designated business account so that you can ensure you are tracking and reporting any income or gains.

How each person or business reports these online marketplace sales on a tax return will all depend on the type of sale and the amount of money made, as well as the nature of the business. A business owner should include any and all 1099-K sales in their revenue calculations. If you operate an existing business, you are likely already including these sales in your regular accounting. A hobbyist should report their sales on Schedule 1, IRS Form 1040, Line 21 of their personal income tax return. (Here’s a helpful link from the IRS with tips for hobbyists.) An occasional online seller or investor, can report their sales and show any income or loss, using Schedule D and Form 8949 on their personal tax return.

If in any doubt, consult a tax professional to get a better understanding of what your tax obligations are as a person or a business making sales online. The $600 reporting threshold will have a lot of taxpayers wondering what their obligations are this year, so getting prepared before tax season is smart so that you don’t have any unexpected surprises during your filing period. A professional can help you understand and report your online marketplace sales correctly. This can provide you some peace of mind knowing you’ll avoid any extra scrutinty from the IRS at tax time. Image found here.

Tech Support Scams

September 28, 2023

Tech support scams are an increasingly pervasive problem, and with advances in technology and scammers getting smarter, the problem only seems to be getting worse, and harder to spot. These fraudulent scams involve deceptive strategies aimed at coercing individuals into paying for tech support under the guise of resolving nonexistent issues with your device or software. This issue is exacerbated by the fact that scammers prey on our legitimate concerns about computer viruses and malware, all while their true objective is far from providing genuine assistance.

In these deceptive schemes, a scammer might simply try to rip you off by charging you (taking your money) to “fix” the problem. What’s worse, they might try to steal your personal financial information, in which case, real damage can be done. Scammers have been able to convince people to remotely connect to your computer under the pretense of fixing the problem, when in reality, they’re installing malware or ransomware – programs that can steal your data and your private information. These installations can also cause serious damage to your devices, so staying aware and vigilant is key.

Scammers will use all kinds of methods to dupe unsuspecting victims. You might get called on the phone by a scammer. They might be pretending to be with a larger tech company – a brand that you recognize and trust. They might even have sophisticated caller ID programs that allow them to hide behind a phone number that looks legitimate. You might get asked to install applications that allow the scammer remote access to your device or your data, which can be the ultimate invasion of privacy and the way that they will tap into all of your personal, private, financial information.

Another common ruse involves pop-up windows displaying fake error messages that cannot be easily dismissed, creating an illusion of a locked browser. These types of tactics aim to frighten you into calling the provided numbers, connecting you directly to the scammer posing as “tech support.” The scammer wants you to engage, and as soon as you do, they’re one step closer to getting you to sign up for a one-time payment or a subscription service that supposedly protects you from this in the future.

Beware of deceptive emails like ones that pretend to report an issue with a “suspended account”. The motivation here is to get you to click on the link in the email, which just installs malware and hands over your personal data to the scammer behind the fake email. Be sure you doublecheck what email address sent you the email, and never click on any links in these emails. Instead you can block any future emails from that address and delete the fake message.

It’s very rare (if not, unheard of!) for a tech company to approach you about an issue on your device unless it’s a widespread recall or security update announcement. Typically, the consumer will be the person reaching out to the tech support company for help when an issue arises. This means that being approached first, before you notice a problem is your first red flag. Tech support companies won’t make unsolicited calls or send pop up windows asking you for your personal information, so don’t offer it up when you’re approached in this way. Error and warning messages in the form of a pop up window will rarely include a phone number, so if it does, don’t call. That’s another potential red flag right off the bat. It’s also worth noting that if you’re being asked to pay in giftcards or cryptocurrency, this should be another warning that something isn’t quite right.

Be careful about where you’re seeking help from if you really do need some tech support, and be diligent about what you’re downloading onto your computers and devices. Make sure the support you’re getting is reputible and coming from a trusted and secure source. Same goes for downloads and purchases related to anything tech support.

If you think you might already be the victim of tech support scammers, start by uninstalling any applications or software that you were encouraged to install. If you’ve given access to your device, consider resetting it to factory settings. Stay on top of all security updates as soon as they’re available for your devices. Having all passwords protected and two-factor authentication is also a smart idea.

There are several ways a tech support scam can infultrate your personal information and all of these tactics aim to trick you into thinking that your computer needs a fix, antivirus software, or that you need to pay for phony tech support. It’s predatory behavior and scammers are clever. Being aware of the ways in which phone scammers, online scammers, and other forms of support based scams can trick you is the first step in safeguarding yourself and your personal information.

How Marriage Affects Debt

September 21, 2023

A lot of couples decide that getting married means merging various aspects of their individual finances. It can be very nuanced and what feels right will vary from couple to couple. For instance, some couples decide that opening a joint savings and checking account make sense for all of the shared expenses. While some couples decide to keep all finances separate. What happens when you marry and merge lives like this is up to you!

You might be wondering: what happens to my debt when my partner and I get married? This too is a bit nuanced, but like most big life changes, it’s good to have detailed conversations with your partner about what feels right for the two of you. Let’s dive in!

How debt is handled before you get married:

If one or both partners bring pre-existing debt into the marriage, the responsibility for that debt lies exclusively with the person who originally accrued it. For example, if one partner has credit card debt and one partner has student loan debt, neither partner is responsible for the other partner’s debt.

As a couple, when one of you acts as a co-signer for the other, or by opening a joint line of credit together, those are exceptions that make the two of you responsible for the debt together. Co-signers are considered equally responsible for any accrued debt, regardless of who benefitted from the debt. To use another example, if one partner got a new car, but both of you co-signed on the loan, you’re both responsible for that debt even if only one of you is the primary driver of the new car. A joint credit card acts the same way – with both people tied to the card it would show up on both of your credit reports and would be reflected individually for both credit scores.

How debt gets handled after you get married:

After you get married, the rules for debt liability can be slightly different than before you get married. If you’re co-signing a debt, or opening a joint credit card together, you’re both equally responsible for that debt. The rules that surround the equal sharing of debt that’s in only one of your names largely depends on what state you live in. If you happen to live in a community property state, then most debts that come after the marriage may be treated as the responsibility of both spouses. Nine states have community property laws. Those states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. To make this rule even more complicated, each state has its own set of laws and rules around which debts fall under the community property category.

In all of the other states that adopt common law practices, any debt taken on after the marriage is usually treated as separate and the responsibility of the spouse who took on the debt. An exception is made for any debts made in one spouse’s name but that benefit both spouses – that could potentially include credit card debt that was used to pay for basic needs like food, clothing, or shelter.

It’s important to understand the implications that come with merging finances and debts with another person. These are big decisions that require both partners to understand the consequences that come with combined debt, or even individual debt within a marriage. Any late or negative payments could affect both individuals on a co-signed agreement or joint account. This could show up as a negative affect to your credit score or your credit report, or both. Regardless of whether or not you live in a community property state or a common law state, you could even potentially be sued for outstanding debts. If the debt is held by just one spouse in a community property state, creditors might hold both people accountable for the debts incurred, and may try to attach to any jointly held assets to recover a debt that’s owed. This might mean any property like a car or a house, and might even include your bank accounts, so if your partner defaults, you and your assets might be on the hook for this debt. If you and your spouse decide to get a divorce in a community property state then the debts you individually incurred would still be yours and yours alone. But any debt taken out after the marriage could be divided equally between the two of you, regardless of who is primarily responsible for the debt. All of this depends heavily on the divorce laws in your state, but in most common law states, divorce courts will usually follow an equitable distribution rule, and that leaves it up to the courts to decide how marital debts would be divided.

Compassionate conversations about money and debt are key.

This is why having detailed conversations about debt and what each person’s personal finances look like is so important before marriage. Understanding how your partner’s finances can affect your own doesn’t seem like the most romantic conversation, but knowing how much debt you have as a couple and who is responsible for that debt at the end of the day is a discussion that needs to be had. This conversation opens the door for deeper and more meaningful opportunities to talk about money, budgets, spending, savings, and debt, among other things that couples should open up about before getting married. These types of compassionate conversations should continue well into the marriage too. It’s all about communication!

However you and your partner decide to divide your debt responsibilities, one thing is for sure – getting on the same page is absolutely necessary through detailed conversations and problem solving. Knowing how your partner’s financial responsibilities and debts could affect you and your finances is essential, and it’s important you work through these details together before the marriage and throughout. Image found here.

What is escrow and how does it work?

August 2, 2023

When you’re in the process of buying a home, you might hear the term “being in escrow.” Escrow works in one of two ways: To hold funds, such as an earnest money deposit, during a real estate transaction. Or, to hold funds owed for annual housing expenses, such as property taxes. Let’s dissect it a little further…

Escrow is a financial arrangement where funds or assets are temporarily transferred to, held, and managed by a third party, known as the escrow agent. It provides a secure way to facilitate various types of transactions, ensuring that both parties fulfill their obligations before the funds or assets are released. Being “in escrow” is most commonly associated with real estate transactions, where the property, cash, and title are held in escrow until all the predetermined conditions are met. Think of escrow as a mediator that reduces risk on both sides of a transaction.

It can also be used for future property taxes and insurance costs on a home you own. Depending on your lender, you could use an escrow account both upfront and over the entire course of your loan to save excess funds for your annual property taxes. A buyer and seller create and use an escrow account with a neutral third party to pay for certain expenses and most importantly, to avoid any uncomfortable or unlawful payment disputes.

In the case of home buying: Escrow would be used in the sale, purchase, and ownership of a home. When your offer is accepted, you’ll make an earnest money deposit. That money will be held in an escrow account and will be applied to the down payment or – if the contract fails – either given to the seller or returned to the buyer, depending on the circumstances and the terms of the agreement. When the paperwork and all of the many closing documents are signed and completed, the escrow company releases the earnest money. During a real estate transaction, escrow provides financial protection for the buyer and the seller should any part of the transaction fall through. The purchase agreement states how much your monthly escrow payments will be and when the escrow company will disburse the funds

Once you already own the property: Your mortgage provider will create an escrow account for your monthly excess payments and will then pay your annual property tax and homeowners insurance bill when they come due. Your lender will calculate how much is needed to cover your taxes as well as your monthly homeowner’s insurance premiums. This is then added to your monthly mortgage payments, and each month, your mortgage servicer will set aside the extra funds into your escrow account. In a simplified way of looking at it, you’re paying slightly more each month to cover these expenses, instead of paying a larger sum of money annually. When it comes time to pay your tax and insurance bills, your mortgage lender will pull the funds from the escrow account and pay the bills for you.

Your monthly escrow payments to your mortgage lender will cover a portion of your:

Property taxes
Homeowners Insurance
Other insurance premiums (such as flood insurance)
Mortgage insurance (if applicable)

There are major positive aspects here when it comes to an escrow account. For starters, it protects your deposit when you’re going to purchase a home. If any part of the sale falls through on the seller’s end, you’ll get that money back. Another benefit is the comfort of knowing you’ll be making smaller payments over the course of 12 months, versus one large payment at the end of the year. You also have the added benefit of avoiding late fees on any missed payments. Your mortgage servicer’s job is to make sure those payments get made on time and filed in the right places.

When you’re considering an escrow account, there may be a few drawbacks as well. This added payment each month makes your monthly mortgage payment higher than its base amount. When you’re starting the home-buying process and meeting with your lender, those estimated escrow payments may be inaccurate and that might mean that there is too little saved in your escrow account, and you may end up owing more. If your taxes or insurance rate has decreased, you may receive a refund from excess payments. This all makes the estimation process a little harder. Your monthly payments may change over time if your insurance rates or property values change, and that also makes budgeting and planning a little trickier.

Escrow can sometimes get a little bit complicated, but ultimately it is available to keep your money safe until it’s needed, and that can offer a lot of peace of mind to a lot of people in various types of transactions and savings strategies. Image found via Credible.

What is a soft inquiry?

July 25, 2023

When it comes to applying for loans or new lines of credit, I’m sure you’re familiar with the term “credit check.” Chances are you’ve had your credit checked, and you know just how crucial a healthy credit score can be for your financial well-being. But have you ever come across the words “soft credit check” on an application? If you have, you might wonder, what’s the difference? Well, let me break it down for you. Both of these involve accessing your credit report, but they serve different purposes and have distinct implications for your credit score.

A soft inquiry, also known as a soft credit check or soft credit pull, happens when you or someone you authorize checks your credit score or credit report. It’s a much less intrusive review of your credit history. Unlike hard inquiries, soft inquiries aren’t initiated when you actively apply for credit. Instead, they occur when someone checks your credit report for informational purposes, verification, or pre-approval processes.

Now, suppose you submit an application for new credit, like a loan or credit card. In that case, the issuer will typically request a hard inquiry to check your credit. Don’t fret too much about hard inquiries, as their impact on your credit scores is usually minimal and only lasts a few months. Some other examples of hard inquiries include requests for credit limit increases, apartment rental applications, new utility applications, or debt collection skip tracing.

On the other hand, a soft inquiry may occur if someone checks your credit report, but you didn’t submit a new application for credit. Soft inquiries aren’t an indicator of greater risk, and they don’t impact your credit scores. You might come across soft inquiries when you check your own credit, when a current creditor checks your credit, or when your credit is checked to see if you qualify for preapproval offers.

Now, as you encounter new applications for financial products or services, they will typically result in either a hard credit inquiry or a soft inquiry. If you’re ever uncertain, you can always call the company to find out what type of inquiry you might expect at the time of applying.

Remember, soft inquiries can be viewed on your credit report. You have the right to request copies of your credit report from each major credit reporting bureau for free every 12 months. There are three major bureaus: Experian, TransUnion, and Equifax, and they each show different inquiries as they are only added to the report that was checked. To get your free credit report from each bureau, you can use AnnualCreditReport.com once every 12 months.

Reviewing your credit reports regularly is an excellent idea. It helps you monitor for fraud and any credit reporting mistakes that could lower your credit score. While you’re at it, keep an eye out for errors, fraudulent information, as well as any unauthorized inquiries.

As we’re more than halfway through the year, let’s be mindful of the type of inquiry being made on your credit report. Here’s to making the rest of 2023 a period of financial growth and success! Image found here.

All about Certificates of Deposit (CDs)

June 28, 2023

If you’re like me, you are brand new to the world of investing, and it’s an overwhelming place to be a newbie. I would categorize myself as a bit more risk-averse when it comes to my money, so a relatively low-risk investment option could be a great way for someone like me who is just starting to learn how to make investments. Something like a CD! A Certificate of Deposit (CD) is sort of a special savings account available through banks and credit unions that offer higher interest on a one-time deposit, in exchange for locking in the funds for a set period of time.

When you purchase a CD, you are agreeing to leave your money with your bank or credit union for the specified term, which can range from a few months to several years. In return, the bank pays you interest on the principal amount you invested. The interest rate is typically a bit higher than what you would earn on a regular savings account because you are committing to keeping the funds deposited for the agreed-upon duration.

The terms of a CD are predetermined, including the interest rate, the maturity date, and any penalties for an early withdrawal. Generally, the longer the term of the CD, the higher the interest rate will be. At the end of the term, the CD “matures,” and you can choose to withdraw the funds or roll them over into a new CD. This is where you can implement different strategies to get the most out of your CD investments.

One popular strategy is the CD Ladder. A CD ladder is a series of CDs, each of which has a different term length. For example, a six-year CD ladder would consist of six CDs that each mature after one, two, three, four, five, and six years. There are also shorter-term ladders like a one-year ladder that would consist of three-month, six, nine, and twelve-month CDs. The strategy here is that each time a CD matures, you have the choice to cash out or roll the proceeds over into a new CD. The longer-term CDs will have a higher interest rate, and the staggered timeline allows you to alternate between cashing out and building a new CD.

Another common approach to CDs is the barbell method. This is simply a mix of long-term and short-term CDs, and the strategy is similar to the ladder strategy but there are no middle-term options. This strategy gives your funds more liquidity, since you have that mix of short-term CDs, you’ll have the option to cash out more often than you would with the middle-term CD options.

A CD bullet strategy is set up more for targeted specific goals. Let’s say you are hoping to purchase a new car two years from now. Today, you start by purchasing a $2,000 CD that matures in two years’ time. Six months later, you buy another $1,000 CD that matures in 18 months. At the one-year mark, you purchase another $1,000 CD that matures in one year’s time. You’re buying a CD or multiple CDs that mature right before the date you need the money for your specific savings goal so that when you go to cash out, you have the amount of the CDs plus the interest that’s been earned over the two-year period. And that can all be put towards your new car.

Other types of CDs to consider are the Bump-Up CD, the Step-Up CD, and the Liquid CD. The bump-up CD gives you the one-time option of increasing your interest rate for the rest of the CD’s term. A step-up CD comes with an interest rate that increases at regular intervals throughout the duration of the term. And a liquid CD, which is sometimes called a no-penalty CD, allows you to withdraw your funds before the maturity date without paying a penalty fee. These no-penalty CDs typically offer lower interest rates than less flexible CD options do, so do some comparing while you shop around for the right thing for you.

One important feature of CDs is that they are insured by the Federal Deposit Insurance Corporation (FDIC) in the United States, up to certain limits, typically $250,000 per depositor per insured bank. This insurance protects against bank failure, making CDs a relatively secure investment option. The same thing goes for credit unions and the National Credit Union Administration (NCUA).

CDs can be a suitable choice for individuals looking to earn a fixed return on their investment while preserving their principal and having a specific time horizon in mind. They are commonly used for short- to medium-term savings goals or to diversify a portfolio with a conservative investment.

The return you see on your CD investment is a reflection of the interest rate, and the length of time that the deposit is being held, and your financial institution will suggest what your investment could yield if all of these factors are met and you don’t withdraw your funds early. This might be a reliable option for someone just looking to dip their toes in the investment pool instead of diving in head first! Image found here.

What is a conservatorship?

June 22, 2023

A conservatorship is a legal arrangement where a court appoints a responsible person or entity (the conservator or guardian) to manage the personal and financial affairs of an individual (the conservatee) who is unable to do so independently due to physical or mental incapacity. A person may need a conservatorship for a variety of reasons when they are unable to manage their personal and financial affairs independently due to incapacity. The purpose of a conservatorship is to protect individuals who are deemed incapacitated and unable to make decisions regarding their own well-being, financial matters, or healthcare. It’s a hard situation to be in, but something we all might one day find ourselves in.

Sometimes it’s a matter of a person aging or getting dementia that might require an arrangement such as this. Dementia can greatly impact their decision-making abilities and make it difficult for them to handle their finances or make sound judgments regarding their own welfare. Individuals with developmental disabilities or intellectual impairments may require a conservatorship if their condition prevents them from managing their personal and financial affairs effectively or if they are vulnerable to exploitation or harm. In worst case scenarios, serious physical illnesses or injuries may warrant a conservatorship. For example, someone in a coma or with a severe brain injury may require a conservator to manage their affairs until they regain capacity, if at all possible. In cases where an individual’s substance abuse or addiction impairs their judgment and ability to manage their life effectively, a conservatorship may be established to protect their well-being and provide assistance with financial matters.

The general test for a conservatorship is whether the individual is capable of knowing and understanding their actions. Is the individual capable of providing for their basic needs, such as food, sanitation and shelter? Is the individual a danger to themselves? These are hard realities to face when trying to do what is best for our loved ones.

The conservator, who is typically a family member, close friend, or professional guardian, assumes legal responsibility for managing the conservatee’s financial assets, paying bills, making healthcare decisions, and addressing other important life or money related matters. The extent of the conservator’s authority can vary depending on the court’s orders and the conservatee’s specific needs.

A limited conservatorship addresses only certain matters such as healthcare or finances. A full conservatorship would essentially give the conservator the same rights as a parent would have over a child. In all cases, a conservator has full authority over their conservatee’s life. Some jurisdictions even refer to these as “adult guardianships”. A conservatorship is to be focused on the needs of the conservatee and not the interests of the conservator or guardian. They might consult healthcare providers or social workers to provide what is best for the conservatee.

Conservatorships are established through a legal process that typically involves filing a petition with the court, providing examples and evidence of the individual’s incapacity to care for themselves, and demonstrating the necessity of a conservatorship. The court then reviews this evidence, conducts hearings if required, and makes a determination regarding the need for a conservatorship. The court-appointed conservator must provide regular reports to the court and may be subject to ongoing court oversight to ensure they are acting in the best interests of the conservatee. It’s a complicated matter and deserves careful attention.

The duration that a conservatorship takes place can also vary depending on the specific needs of each conservatee. A short-term conservatorship typically happens when someone is unexpectedly incapacitated and usually only lasts a few months. A temporary conservatorship is also usually grouped with a limited conservatorship and only lasts for a limited period of time, as the name suggests. A permanent conservatorship will last the length of the conservatee’s life. The individual can file to have it removed but they will need to present their case and will need a court order to succeed in this attempt.

In the context of a financial conservatorship, the primary responsibilities involve ensuring the payment of the conservatee’s bills, filing taxes, and managing investments, among other tasks. It is essential to secure funds for the conservatee’s daily needs and, if necessary, personally handle necessary purchases. In the case of a physical conservatorship, the focus is on guaranteeing the conservatee’s access to required healthcare and ensuring they reside in a safe living environment.

The highest priority for the conservator of the estate is to refrain from exploiting the conservatee’s resources for personal gain. For instance, if the conservator arranges for the conservatee to reside in a care facility, they must not move into the conservatee’s home. It is strictly prohibited for a financial conservator to utilize the conservatee’s money for their own advantage.

It’s worth noting that the establishment of a conservatorship should always be considered as a last resort, and less restrictive alternatives, such as supported decision-making, power of attorney, or healthcare proxies, should be explored first. The goal is to strike a balance between respecting an individual’s autonomy and providing the necessary support and protection when they are unable to manage their affairs independently. If you are struggling to decide if conservatorship is right for someone in your own family, you may want to speak to a financial advisor to get some questions answered and some professional guidance. Image found here.

What is debt restructuring?

June 19, 2023

It seems as though in today’s world, financial hardships have become all too familiar for many individuals, and even for businesses. Mounting debt can seem impossible, casting a shadow on one’s financial well-being and future outlook. With the potential to restructure and alleviate the burden of debt, this option offers hope and a fresh start to those grappling with overwhelming financial obligations.

Debt restructuring is a process used by individuals, businesses, and even entire countries to avoid the risk of defaulting on their existing debts. The debt restructuring process involves modifying the current terms of a debt agreement between a borrower and a lender. This process may provide a less expensive alternative to bankruptcy for some people. When you, as a borrower, are faced with financial difficulties and cannot meet your debt obligations under the original terms of the agreement, debt restructuring can come into play to provide some relief to make things more manageable and sustainable.

The specific details of debt restructuring will vary depending on the situation and the parties involved, but it can look a little bit like the following:

An extension of the repayment period: The borrower and lender may agree to extend the repayment period, allowing the borrower more time to pay off the debt. This can help reduce the amount of each installment payment, making it more affordable for the borrower.

A potential reduction of interest rates: The lender may agree to lower the interest rate charged on the debt, which can help reduce the overall cost of borrowing and make it easier for the borrower to repay. A lot of debt restructuring can involve a combination of both lowered interest rates and an extension of the repayment period. These adjustments are typically a win-win for both parties. It relieves some of the financial burdens for the individual or the business that’s in need of debt restructuring, and it provides a better chance for the lender actually to receive more money this way versus through bankruptcy filings.

In some cases, the lender may agree to reduce the principal amount owed by the borrower. This means forgiving a portion of the debt, which can provide significant relief to the borrower’s financial burden.

Debt restructuring within businesses may involve converting debt from one form to another. For example, a business could restructure its debt with a debt-for-equity swap, which would look like a lender agreeing to cancel a portion or all of the debt in exchange for equity or part ownership in the business. If the borrower’s financial health is deteriorating and there is a high likelihood of default, converting debt into equity allows the lender to become a partial owner of the borrower’s assets, which may offer better prospects for recovery if the borrower’s financial situation improves in the future. This option is more commonly used in corporate debt restructuring scenarios.

Individuals can attempt to renegotiate the terms of their debt on their own with their lenders, but there is also the option to seek help from a reputable debt relief company that can assist in negotiations on your behalf. The unfortunate reality is that this is an area that is full of scams and it’s important that you know you are working with a reputable company that comes with recommendations or high-quality reviews.

It is important to note that debt restructuring does not eliminate the debt entirely but rather modifies its terms to make it more manageable for the individual or business and their monthly payments. Debt restructuring is often seen as a preferable alternative to bankruptcy, as it allows the borrower to avoid the severe consequences of defaulting on their debt. By restructuring your debt, you can have a chance to regain financial stability and continue meeting your financial obligations over time. Investopedia created an extensive list of reputable debt relief companies which you can view here. These places are a good way to get help if your debt feels overwhelming.

Saving Money on Groceries

May 22, 2023

Groceries are a significant expense for most households, and in today’s world, prices of grocery staples are soaring. With smarter shopping strategies and some pre-planning, you can actually save money on your groceries each month, without sacrificing the quality of what you’re eating. If your grocery expenses make you wince on a regular basis, think about changing the way you shop and implementing some new strategies for planning your meals. Just a few tweaks to the way you are already doing things might be all it takes to reduce your grocery bill. Let’s dive in!

Plan Your Meals: Creating a meal plan is essential for saving money on groceries and it’s the first step toward making some actual changes in the way you shop. Going to the store without a plan leaves you vulnerable to more impulsive choices while you’re there. (And don’t even think about going to the store hungry!) Take some time each week to plan your meals. If you’re not sure where to start, make a list of all the nourishing foods that make you feel your best. Now what can you pair with those foods to create a nutritious meal? Always consider the ingredients you already have on hand and those that might be on sale. This way, you can avoid buying unnecessary items and reduce food waste. You can also plan on making larger quantities so that you have leftovers and extra meals to potentially pack in a lunch or use for a weeknight dinner when you don’t have time to cook.

Make a Shopping List: The other step that’s just as important as your meal planning is the list you make. Before you go to the grocery store, create a detailed shopping list based on your meal plan. Stick to the list as much as possible to avoid impulsive purchases. Having a list will keep you focused and prevent you from buying items you don’t need. Making a list also helps so that you don’t forget anything!

Compare Prices: Being willing to grocery shop at multiple stores for the things you need each week can often be a significant cost reduction. Compare the prices of the things you need at different grocery stores in your area, and consider visiting discount stores, local markets, wholesale clubs, or even shopping online to find the best deals. Don’t forget to check out the weekly flyers that come in the mail, or look for price comparison apps to identify sales and discounts.

Buy in Bulk: Certain staple items like rice, pasta, beans, and canned goods can often be cheaper when purchased in bulk. However, make sure to calculate the unit price to determine if it’s truly a good deal. Buying in bulk is especially beneficial for non-perishable items that you frequently use and for large families. If you and your household can make it through a larger amount of frequently purchased items, buying in bulk could amount to big savings.

Look for Generic or Store Brands: When you’re shopping at the store, it’s common to see various brands and options of the same products. You might find eight different cans of black beans – all the same thing, but different brands and different prices. Often times grocery stores will offer a store brand or a generic version of various products that are often just as good in quality but come at a lower price. Compare the ingredients and give the generic brand a try! You might be surprised at the savings without even noticing a difference in quality or taste.

Shop Seasonally: In-season produce tends to be more abundant, which leads to increased supply and lower prices. When fruits and vegetables are in surplus, farmers and suppliers offer better deals, making it a cost-effective choice for consumers. They are also packed with flavor. Plan your meals around seasonal produce, and if possible, consider freezing or preserving some for later use when they are no longer in season.

Utilize Coupons: When you find and use coupons, you can maximize the purchasing power of your dollar. By using coupons strategically, you can afford more items or higher-quality products than you would without the coupons. These savings could help you stock up on essential items, try new products, or indulge in treats that may otherwise be beyond your budget. There are a lot of places to look for coupons for the grocery store. Check your newspaper, and your mail, check store websites, social media, coupon websites, loyalty programs, shopping apps, and any flyers that might be present at the front entrance or customer service desk. Combining sales, coupons, and loyalty discounts can mean huge savings for you! All you have to do is strategize a bit.

Avoid Pre-Packaged and Convenience Foods: Pre-packaged and convenience foods are usually more expensive compared to preparing meals from scratch. While they offer something quick at the moment, they often come with a higher price tag. Invest a little extra time in preparing meals at home, and you’ll see substantial savings. There are a lot of creative, budget-friendly cookbooks on the market now too, so look for something new to help you get inspired in the kitchen and to keep your cooking proactive.

Reduce Your Meat Consumption: Meat can be expensive, so consider incorporating more vegetarian or plant-based meals into your diet. Beans, lentils, tofu, and eggs are excellent sources of protein and are usually more affordable. Meat also has a shorter shelf life compared to many plant-based foods. By consuming less meat, you may reduce the risk of meat products going bad or being wasted. This can help prevent money from being wasted on food that ends up in the trash. Reducing meat consumption can encourage culinary exploration and creativity, which can diversify your diet and make meals more interesting!

Work to Minimize Food Waste: Nothing hurts more than realizing I didn’t eat that pack of raspberries quick enough, or use up the entire bag of spinach before it went bad. Reducing food waste not only helps the environment but obviously, saves your money from being wasted. Plan your meals and use your leftovers creatively if you can. Store food properly to extend its shelf life, and learn how to repurpose ingredients to avoid throwing them away. This creative time in the kitchen can be a big stress relief and might also become a new hobby for you!

Saving money on groceries is all about smart planning, mindful shopping, and making wise choices. So much of it is just preparation and planning, and if you can find new ways to build that into your routine it will definitely save you money while you shop for groceries. I hope that these tips can help you significantly cut down your grocery expenses without sacrificing the quality or excitement of your meals. Remember, start with small changes in your grocery shopping habits. It can add up to substantial savings over time. Image found here.