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Finances

Fewer New Year’s Financial Resolutions a Sign of Apathy?

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Even as America enters its nine-year run in a bull market, the sheer number of people making year-end financial resolutions is at an all-time low, according to the ninth annual “Fidelity Investments New Year Financial Resolutions Study.” The reason? Because so many “are feeling better about their personal financial situation and are generally optimistic about what 2018 will bring,” according to the study.

In fact, only 27 percent of respondents say they intended to make a financial resolution this year. That’s down 16 percent from the high of 43 percent who answered similarly heading into 2014, and this is what could signal a worrisome sense of “inertia.”

“Now is not the time to take one’s foot off the pedal, because good financial times can represent the best opportunities to help achieve your goals and establish saving and investment habits that can get one through good times and bad,” warns Ken Hevert, Fidelity’s senior vice president of retirement.

So what were this year’s top three resolutions?

The same as last year’s: save more, reduce debt, and spend less. However, when you look at those respondents who ended 2017 feeling better about their finances, 66 percent singled out being able to “save more” as a major factor.

Dig down to Millennials – who recently surpassed Boomers as the nation’s largest living generation. Not only did 78 percent of those surveyed report that higher savings had improved their finances, but 90 percent believe they’ll be even better off in 2018.

But that’s not to imply that all is well.

Fifty-seven percent of all respondents cited “unexpected expenses” as a top concern for 2018, and a large chunk of them say they’re planning on increasing their emergency funds based on Mother Nature and the natural disasters of last year.

As far as your finances go, know that two of the best strategies that worked for the study’s respondents were:
• Breaking a goal into smaller, more attainable targets.
• Rewarding yourself for hitting milestones along the way.

More in-depth tips from Fidelity, titled “3 Ways to Succeed at New Year’s Resolutions,” is available at fidelity.com/resolutions. And for those who really want a financial reality check, including tax guidance, there is “Five Things to Review Annually”.

Fidelity’s Hevert even has a piece of advice for those who disdain financial resolutions entirely: “Make saving and investing a permanent habit, not just a once-a-year vow.”


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Finances

11 Apps To Increase Your Nest Egg

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Amazon

This is kind of a no brainer! Amazon is the world’s largest retailer selling nearly everything. Using the handy app, you can see prices and production information for items you snap a photo of, scan, or voice prompt. What’s particularly useful is Amazon’s massive volume of user reviews and side-by-side product comparisons.

Digit

Saving is effortless with this app. Digit automatically deposits money into your savings account from your checking account. Typically, between $10 and $30 is deducted based on your spending habits and what it determines you can spare. The money goes into an account from which you can deduct funds at any time.

Flip

Not getting the Sunday paper? No problem. Browse ads, sales, coupons, and other special offers from the Sunday circulars. The Flipp app covers weekly ads from over 800 retailers, including grocery stores, pharmacies and big box retailers. If you add your loyalty program numbers, some discounts will be automatically applied when your loyalty card is scanned at checkout, without any physical coupons.

Level Money

You can fight the temptation to spend with Level Money, which shows you exactly how much you can reasonable spend daily, weekly and monthly. It starts with your bank balances and then subtracts essential such as rent and utilities, as well as planned savings. The amount left is your “spendable balance”. The app doesn’t have access to your bank accounts, you have to transfer the the extra money that you accumulate into your savings.

Mint

This classic budgeting app allows you to see exactly where your money goes when you link your banking and credit card account. A multi-color pie chart will track all of your spending and suggestions for a budget is made based on the amounts you spend. You can set alerts on set limits for certain expenses, when bill payments are due and when you bank balance dips.

Paribus

Many stores offer refunds if the price of an item drops soon after your purchase. Since no one wants to monitor this after a purchase, many refunds go unredeemed. Enter Paribus, which not only tracks items you have purchased online but automatically request refunds of the price drops. There is no coast for the service but, Paribus takes a 25% cut of the refunds it retrieves.

Prosper Daily

Spotting erroneous charges can be difficult. When you link your credit card accounts to this app, it flags duplicate and suspicious charges for you to take a closer look. It also notifies you when there has been a data breach at a business you shopped in the past.

RetailMeNot

This app has promotional codes, coupons and other discounts at 50,000+ restaurants and major retailers, and deals for physical stores and online purchases alike.

SkipLagged

This app is very similar to Kayak and google flights for finding airfare between specific cities. But Skipplagged allows you to search with a “hidden city” option. For example- a one way ticket from DC to Miami with a layover in Atlanta, when Atlanta (the layover city) is really your final destination. By ditching the second leg of your trip, you may save money (and time) versus purchasing a ticket directly from DC to Miami.

Wallaby

Maximizing your credit card rewards can be a lot of work. This app does the work for you by telling you which card to use at which establishment that will offer the greatest reward. Wallaby offers a browser extension download for on-line purchases.

Honorable Mention:
Houzz

As you continue saving for your home, creating an idea decor book will keep you motivated. Instead of purchasing piles of magazines for inspiration, use Houzz to search millions of photos from designers and product manufacturers. You can store your best ideas in the Houzz ideabook so you don’t lose track of that perfect paint color or area rug.


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Finances

Mortgage Numbers You Should Know

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As you get your finances in order to prepare for buying a home, keep these all important mortgage numbers in mind:

660  |  750

Although the minimum FICO credit score needed to qualify for a FHA mortgage is 580, aiming for a 660 score is a safer bet.

For a conventional mortgage aim for a 740 credit score or higher.

An excellent credit score– 740 and and up is money in your pocket.

On a $250,000 30-year fixed rate mortgage, someone with a score of 620 would pay about $240 more per month than someone with a 760 score.

 My Quick Tip:   Since the amount of your available credit is a key factor in your credit score, contact your credit card issuer to request a credit limit increase.

Having more unused credit will increase your credit score.

Ideally, you should not use more than 10% of what’s available.

28%  |   36%

The number one rule of personal finance is to earn more money than you spend.

Keep housing costs to no more than 28% of your monthly income before taxes.

Housing costs will include your monthly mortgage payment (principal and interest), homeowner’s insurance, property taxes and homeowner’s association fees, if any.

Your monthly housing costs plus any other debts you have (student loans, car payment, credit cards, etc.) should be below 36% of your monthly income before taxes.

This is your income to debt ratio or DTI.

Your DTI is very important. It is one way lenders use to measure your ability to manage the monthly payments of the money you have borrowed.

The quickest way to improve your DTI is to shrink your expenses.

Consider the following methods for cutting expenses:

  • Reconsider your commute. Try public transportation, carpooling, bicycling, or walking if at all possible. This options will save you money on monthly gas expenses and it’s better for the environment.
  • Cancel subscriptions you’re not using. You might have regular deductions on your account for services like Spotify, Netflix, and more that you didn’t even know were there. What do you actually use?
  • Cook more. Better yet, cook in bulk. Bulk meals with a lot of leftovers will last you a while with minimal cost. This is especially helpful for families. Plus, the leftovers make great work lunches.
  • Buy in bulk and off brand. Get a membership to stores like Cosco or Sam’s Club, and buy non-perishable items in bulk. You can also skip some branded items too to save a little extra.
  • Reduce your cable bill. What is your current package getting you? Do you really need HBO or Showtime? It’s possible you don’t need to be paying nearly as much for cable.
  • Review your cell phone plan yearly to verify that you are getting the best rate.

Someting, something

10%

Aim for a 10% percent down payment, and if possible 20%.

A higher downpayment helps you helps you qualify for a mortgage and reduces your monthly payments.

The Federal Housing Administration (FHA) offers mortgages requiring only a 3.5% down payment.

Programs via Freddie Mac and Fannie Mae only require a 3% down payment but, you will have to pay more in other fees— such as, mortgage insurance.

 My Quick Tip:   To expedite down payment savings, have a dedicated savings account for your down payment.

Contact your payroll department to have a small portion of your salary deposited directly into your savings account.

If thats not an option, set up automatic transfers from your checking account each pay period. You’ll never miss it!

If you have any questions or need any assistance with the mortgage numbers listed, please contact me. I will be happy to help!


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