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Tarra Jackson

Jul 12
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3 Ways to Avoid a Financial Entanglement

By Money Management No Comments

On Friday, July 10, Jada Pinkett Smith took herself to The Red Table to address rumors regarding her alleged relationship with the singer, August Alsina. Since the series focuses on intimate, and often difficult, conversations, Jada’s sit down with herself made sense.  

Not surprisingly, this episode racked up more than 15 million views in the first day of airing, a record for Facebook live. In the episode, Will Smith, her husband of 23 years, questions her about what happened with August to which she responded, she was in an “entanglement.”

Courtesy of Shutterstock

Entanglement- n. a complicated or compromising relationship or situation

Admittedly, Jada’s characterization might be fair based on the definition. IDK but that’s not why we’re here. We are on the subject of how to avoid “a complicated or compromising situation,” in your finances that could cost your family thousands.

One: Have a Will

It is estimated that dying without a will, or intestacy, reduces what a family receives when a family member dies by 30%. The culprit? Administration fees. The heirs, usually close family members, are entitled to a portion of the deceased’s estate. But without a Will which names an Executor, the heirs have to agree to who is going to run, or administer, the business of the deceased. If the heirs cannot agree, then the family has to go to Court, spend time and money for the Court to decide who will be the Administrator.

To make matters worse, the laws of the State where the person dies dictate what the heirs are entitled. These laws are typically outdated and result in big surprises because the result is not what most people expect nor what the deceased likely would have wanted.  For example, in Pennsylvania, a surviving spouse can receive as little as one-half of their deceased spouse’s estate.

Because estates can be difficult to administer, many people ignore it. Unfortunately, ignoring it can cause more problems and additional expense. Most notably what’s referred to as a “tangled title.” A tangled title is when the owner of the property has died and their heirs, often the second or third generation, live in the property without obtaining title to the property because the estate has not gone through probate, the appropriate court process.

The number of possible heirs, after two or three generations, can be staggering.  In most cases, all heirs have to agree on who will receive the property which in many cases does not happen, at least not easily.

Untangling a title is time consuming and costly. It can take an attorney more than thirty-five (35) hours to clear title which does not include multiple court appearances and administration costs.

Tangled titles reduce familial wealth in two ways. First, because the person living the property does not own it, they are unable to obtain financing for costly, but necessary, home repairs. In many cases, the resident of the property is unable to enter into an agreement to prevent foreclosure. As a result, the property is either lost to Sheriff’s Sale or sits vacant in disrepair.

To avoid the problems associated with dying without a will, people should work with an attorney to discuss their wishes and memorialize them in a will. In addition to a will, many attorneys might suggest a durable Power of Attorney and a healthcare proxy. Non-probate assets, which include retirement accounts, insurance policies, and some real estate are not controlled by the will and should be discussed to ensure those assets are in-line with your overall estate plan.

Two: Establish and

maintain good credit

In 2017, Stephen Brobeck, president of the CFA, Consumer Federation of America, shared, “[l]ow credit scores can cost consumers hundreds, and sometimes thousands, of dollars a year in higher loan and service costs.” Completely understand Stephen’s point because ten years prior, in 2007, I financed a 2007 Volkwagen Jetta but with poor credit, the best interest rate available was an 18% APR, almost four times the rate someone with good credit would have paid for the same car.  

Beyond flatout credit denial there are some not so obvious effects of bad credit.  Because statistics show that drivers with bad credit file more claims, your credit score can affect your car insurance premiums unless you live in California, Massachusetts, or Hawaii. If you are approved for an apartment, you may be forced to pay a higher than normal deposit. Utilities can also require a deposit. It goes without saying that those with bad credit will pay more interest and receive less favorable terms for credit cards.

Three: Maintain an

Emergency Fund

A well-funded emergency fund is the key to a strong financial foundation.  In the past, I’ve suggested at minimum $2000. Although I still suggest $2000 as your “zero,” having more such as three to six months of expenses saved is critical, especially in these uncertain times.  

         The emergency account is for the emergencies you cannot anticipate including loss of income due to disability and unexpected car and home repair. I caution against using credit for unexpected expenses because it, quite literally, compounds a bad situation with interest.

         Your emergency fund should be readily accessible but not too easily accessed that you are tempted to use it for non-emergencies such as vacations.

Conclusion

In short, avoiding financial entanglements requires being real with yourself, assessing your financial goals and putting a plan in action.

The post 3 Ways to Avoid a Financial Entanglement appeared first on The Ivy Investor.

Jan 07
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Simple Steps to Do a Financial Checkup for the New Year

By Credit, Insurance, Investments, Money Management, Retirement, Saving, Taxes No Comments

You may visit your doctor once a year to make sure all is well, but there’s something else to pencil on the calendar: an annual financial checkup.

If you were on a long road trip, you’d stop occasionally and look at the map to see if you were headed in the right direction. An annual financial checkup serves the same purpose. It’s an opportunity to review how you’ve done financially over the past twelve months and make sure you’re still headed in the right direction when it comes to managing your money.

A good time to check in with your finances is before the end of the year so you can take advantage of any tax-saving strategies, but if you can’t fit it in during the busy holiday season, plan on doing it as soon after the New Year as possible. Here are the key steps to take when planning a money checkup:

1. Identify Your Goals

The first step in your financial checkup is evaluating your financial goals. Have you made progress on them this year? If not, where have you fallen short? Can you figure out why? Have your goals changed during the year? If so, revise them and write them down.

Next, consider what new money goals you’d like to set. For example, you may want to fully max out your 401(k) at work or add another $10,000 to your emergency fund. Establish clear goals and break down the action steps you need to take monthly, quarterly and annually to reach them.

2. Evaluate Changes in Your Personal Situation

Have changes in your personal situation taken place in the last year or do you anticipate any major changes in the near future? A job change, divorce, adding a baby to your family, retiring, buying a house, getting married, or moving can alter your income and your lifestyle significantly.

You may need to adapt your budget, your spending, your savings, and your investments. Your tax filing could also be affected if you’ve added to your family or you’ve seen a major increase or decrease in your income. Having time to plan for these changes in advance will make the transition much smoother.

3. Protect Your Assets

Next on your annual financial checkup to-do list is considering how well you’re protecting your assets. Start by reviewing your homeowner’s or renter’s insurance, health insurance, auto insurance. Don’t forget to protect the greatest asset of all – your income-earning ability – with long-term disability insurance.

TIP: While reviewing your insurance coverage, also review your premiums. Consider whether you can save money by switching to a different carrier or bundling your various insurance coverage together with the same provider.

4. Prepare for the Unexpected

Review your will, and if applicable, your estate plan. Have any changes taken place that requires updating? If so, you may need to update your will.

Also, review your life insurance coverage to make sure you have a large enough policy to protect your loved ones financially if something should happen to you. And if you don’t have life insurance yet, that’s something to consider getting sooner, rather than later. The younger and healthier you are, the lower your premiums are likely to be. Meet with a life insurance agent to discuss whether a term or permanent life insurance policy is best for your situation.

5. Evaluate Your Investment Performance

Calculate the return on each of your stocks, bonds, or mutual funds. Are you satisfied with their performance compared to the rest of the market? If you don’t believe the investment will recover its losses, it may be time to sell the dogs.

The end of the year is a good time harvest tax losses. Harvesting losses allows you to offset capital gains on your investments with losses stemming from under-performing investments. This strategy is effective in a taxable brokerage account, since investments in a 401(k) or IRA are already tax-advantaged.

WARNING: Watch out for the wash-sale rule when harvesting tax losses. This IRS rule dictates that any new investments you purchase within 30 days of selling an investment to harvest losses must be substantially different.

6. Evaluate Your Debts

As part of your annual financial checkup, consider how well you’re doing with managing debt. Specifically, evaluate your debt to income ratio. Has your credit card debt decreased this year? If not, it’s time to figure out where the leaks are taking place and try to plug them. It’s difficult to get ahead and invest when too much of your income is going to interest payments on credit cards.

How’s the interest rate on your mortgage? Should you consider refinancing? Even a small dip in rates can make a big difference in the life of your mortgage, but you have to consider closing costs to see if it’s worthwhile.

Lastly, how’s your credit score? If you haven’t ordered your free copies of your credit report, now’s a good time to do it. You can get one free copy of your credit report per year from AnnualCreditReport.com. Once you have your copies of your credit reports, review them carefully and dispute any errors you come across.

7. Reduce Your Income Taxes

This is a good time to plan for next year’s taxes. What can you do to minimize them? Add up all your allowable deductions and see if you can itemize. Review the list of allowable deductions and make sure you take advantage of any you’re eligible for. Consider bunching deductions into one year or accelerating deductions by paying tax-deductible items early to help you reach the threshold for deducting.

For instance, medical expenses can only be deducted if they exceed 7.5% of your income. If you’re close, pre-paying an orthodontia bill or scheduling that elective surgery before the end of the year could save you some money on taxes.

8. Review Your Retirement Plans

Last but not least, look at how you’re doing with regard to retirement funds. Are you contributing the maximum to your 401(k) plan? This is one of the best tax-reducing strategies available. If your employer doesn’t have a 401(k), does it offer any other kind of plan? If not, consider setting up an IRA on your own.

Also, look into whether your company offers other ways to save, such as a Health Savings Account. An HSA isn’t a retirement plan, per se, but it’s a good way to save for future health care expenses on a tax-advantaged basis.

NOTE: HSAs are associated with high deductible health plans only. But they offer triple tax advantages: tax-deductible contributions, tax-deferred growth and tax-free withdrawals for qualified medical expenses.

How’d you do? If your financial health is in good shape, congratulations! If it can use a little work, at least you know where you need to concentrate your efforts. And remember to update your annual financial checkup at the same time next year to track your progress.

Originally published at TheBalance.com by Deborah Fowles.

Jan 01
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How to Save About $1400 With This Easy 52 Week Savings Challenge

By Money Management, Saving No Comments

Have you, or someone you know, ever wanted to save over $1,000 in a year?  YOU CAN!!!

You can save about $1,400 easily by following this simple and affordable 1 Year Savings Challenge.  The best thing about this challenge is that you can choose your way to save!

So, whether you get paid weekly, biweekly, semi-monthly or monthly; below lists the amounts to save so you will end up with almost $1,400 at the end of the year.

Image this … within 52 weeks you will have saved up money towards emergencies savings, a vacation, a down payment for a new car, paying off a small debt or for Christmas gifts.

Saving is easy and fun with this 1 Year Savings Challenge.

It’s even more fun when you get the whole family involved.  Have a contest with your spouse and/or children of how much money each person can save. The winner gets a special reward and recognition every month or quarter to keep the momentum going!

Here’s how the challenge works.

Simply save $1 for the first week, $2 the second week, $3 the third week, etc., until week 52. If you get paid biweekly, save $4 for the first pay period, $8 the second pay period, $12 the third pay period, etc., until the 26th pay period. Get the picture?

Save More This Way

To save more at the beginning and faster, simply do the challenge in reverse.  Start with saving $52 the first week, $51 the second week, $50 the third week, etc.  The same with any plan you choose based on your paycheck frequency.

RELATED:  Cool way to automate your Savings for the 52 Week Money Challenge.

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Dec 27
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Year End Giving that Gives You a Tax Write Off

By Money Management, Taxes No Comments

Syndicated: ClarkHoward.com | by Wes Moss

Hard to believe but ‘tis the season – not to be jolly, but to start thinking about your taxes!

Yes, Tax Day isn’t until April, but there are many steps you can take in these waning days of 2016 to reduce your obligation to Uncle Sam, or boost the size of your refund.

Charitable giving is one of the best ways to cut your tax bill. It’s my favorite because it allows us to help others while helping ourselves. Here are six ways to give your way to a smaller taxable income.

Write a check

The money you give to qualified charitable organizations is 100% deductible from your taxable income up to 50% of your adjusted gross income if you itemize your deduction. Before you make a sizeable contribution you might want to check out the intended recipient on one of the philanthropy watchdog websites. They’ll give you an idea of how efficiently a non-profit operates.

Empty your closet

Donating clothes and other household items to charity can result in a tidy tax deduction. Contributions up to $250 require a receipt from the organization. Donations valued at between $251-500 require a receipt from the charity with the name, address, date, location and a list of items donated. If you are making a donation valued at $501 to $5,000, you must provide information about when you acquired the items and how much you paid for them.

Donate your car

There are two ways your old car might help a non-profit. They may sell your clunker, in which case your deduction is limited to what the organization gets for it. Or, the group might use your vehicle in its work, for delivering meals to shut-ins, for example. In that case, you can deduct the fair market value of the car or truck.

Give stocks

If you’d like to make a large gift, consider donating appreciated stocks or mutual fund shares that you’ve owned for more than one year. This is a tax-time twofer. First, you get to deduct the fair market value of the stocks on the day you donate them. Plus, you avoid capital gains tax on those shares.

You might also consider setting up a donor-advised fund, a sort of personal charitable foundation. The value of securities you place in the fund is tax deductible. You will eventually sell those stocks and use the proceeds to make contributions to your favorite non-profits.

Give to family – or anyone else

You can give up to $14,000 to as many people as you like without filing a gift tax return. This is a good way for folks in the 20 states with estate or inheritance taxes to reduce the size of their taxable estate over a period of years.

Share your IRA

If you are at least 70 ½ years old, you can donate up to $100,000 from your IRA to charity. Such gifts count as a required minimum distribution (RMD) but are not taxed like regular RMD withdrawals.

So, there you have it – a holiday gift basket of ideas to brighten the lives of others while easing your own tax burden. Tidings of comfort and joy, indeed!

Related article: Owing Taxes SUCKS! 3 Ways to Reduce Taxes Owed!

Dec 19
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10 Ways to Improve Your Finances Before the End of the Year

By Money Management, Saving No Comments

A lot of people ignore their financial problems, or their finances in general, because they know they can’t afford to fix everything at once — or, they simply just don’t know where to start.

One of the biggest challenges to improving your financial situation, both now and down the road, is accepting the fact that it won’t happen overnight.

So instead of trying to change everything all at once, start with small steps — small changes and milestones that will get you, and keep you, on the right track. Then each step you take will just be more motivation to keep going, because you will be able to see your progress every month.

By making small changes and better decisions each and every day, you can have a big impact on your future. And before long, you’ll be able to see how all those small steps can add up to big progress!

To help you get started, here is a list of some easy things you can start doing today — and by the time 2018 rolls around, you’ll have a whole new outlook on your financial life!

1. Cancel a subscription or other monthly expense

If you want to get your money in order — both for the short term and the long term — take a look at all of your monthly subscriptions and figure out which ones you don’t really need. Cut at least one. Then next week or next month, cut another one. After a few months, you’ll start to see the difference in your accounts, allowing you to save more and develop better budgeting habits over time.

Here are a few examples of subscriptions you may be able to live without:

  • Gym membership: If you go to the gym every day, you may want to keep your membership. Go to the manager and ask about special offers to decrease what you’re paying. You can also shop around for better prices at other gyms — then take a better price offer to your current gym and ask for a decrease in your membership fee. Also check out these 8 ways to save on a gym membership.
  • TV: Here’s a list of several alternatives.
  • Magazine subscription
  • Other: Are there any monthly/annual subscriptions (like Netflix or Amazon Prime) that you can cut and share with someone in your family? By sharing the account, you cut the cost in half!

Read more: 19 ways to cut costs and save more

2. Lower a monthly bill

A lot of people don’t realize they can lower their existing monthly bills just by doing a little negotiating. Many people can even get their credit card interest rate lowered — just by asking!

Here’s more on how to lower your existing bills.

3. Increase your 401(k) contributions

Log on to your 401(k) or other retirement account online and increase the amount you’re contributing each year. A boost of just 1% is probably small enough that you won’t even notice the money gone when you get your next paycheck. And even just an extra 1% can add up to a lot of extra savings over time!

If you can’t do it online, make a note to call your plan provider tomorrow!

Read more: The #1 tip to maximize your 401(k) investments

4. Make your savings automatic

The best way to start saving more money is to make it automatic. By giving every dollar a purpose, you can avoid reaching the end of the month and having no clue where all your money went — including the money you intended to save.

Figure out how much money you can realistically save each month, after covering all your bills and other expenses, and then set up your direct deposit to have that amount sent directly to savings. That way you won’t be tempted to spend it, and if you absolutely need the money, you can access it pretty easily.

Read more: How to automate your savings

5. Cook dinner at home

According to a recent survey, among households with annual incomes of $75,000 or more, one-third live paycheck to paycheck, and 44% said lifestyle purchases, such as dining out and entertainment, were big hindrances to saving. Among millennials bringing home $75,000 or more, 71% confessed these expenses were stealing their savings.

Get into the habit of cooking at home more. The more you do it, the more you’ll save. Plus, a recent study found that eating at home will help you lose weight, too.

6. Make an extra payment toward a debt

The average U.S. household is carrying more than $15,000 in credit card debt, according to a study by NerdWallet. And as that debt rolls over each month, the total amount owed continues to increase — sometimes by quite a lot each month — depending on the credit card’s interest rate.

Think about your situation: do you have any credit card debt or student loans hanging over your head? Those debt obligations can be big obstacles keeping you from reaching your financial goals. So the quicker you get it paid off, the quicker you will be able to truly start building wealth.

One thing you can do today is make just one extra payment toward a debt. While you may not be able to pay off the entire balance today, every little bit helps. Skip a splurge this week and use that money to pay extra toward your credit card bill or student loan debt. Put the extra money toward whichever debt has the highest interest rate — as that’s the debt that will end up costing you more money over time (the longer it sits there accruing interest, the more you’ll owe).

Paying an extra $100 toward debt, instead of wasting it on something you don’t need, will be more beneficial to your long-term financial goals by allowing you to become debt free sooner in life. Plus, the more you start to pay down debt, the quicker you’ll see the light at the end of the tunnel of getting it paid off.

7. Transfer a high-interest debt

If you have a big credit card bill that’s slamming you with high interest fees every month, transferring the balance could save you hundreds of dollars. By allowing you to transfer the debt to a credit card with 0% APR (annual percentage rate) for a certain number of months, these types of offers can help you pay off your debt in a timely manner — without having to pay interest. 

So if you have a credit card with a high interest rate, check out this list of great balance transfer options.

Once you transfer the debt, your payments will go a lot further without the high interest — which will cost you less money in the long run and also allow you to get it paid off quicker.

8. Find free money

Unclaimed money from bank accounts, insurance policies, rental and utility deposits, safe deposit boxes and other places could be hanging out there somewhere in your name. All you need to know is how to check and collect it without paying any fees.

It’s particularly easy if you have a unique last name. Simply go to MissingMoney.com and punch in your name to do a database search of available unclaimed funds across all states. With one click of your mouse, you can cover the entire spectrum of what’s available.

Please note that not every single state participates. If you live in a state that doesn’t participate with this free site, there’s one more option for you: Unclaimed.org. This website is a clearinghouse for the National Association of Unclaimed Property Administrators.

Also, if you ever had an FHA home loan, HUD may be sitting on refund money for you. Go to HUD.gov and see if you’re in their refund database.

More ways to find free money in your name.

9. Reduce your student loans

Many people don’t realize that a big chunk —often the majority — of their monthly payments are probably going toward interest, depending on the interest rate and other factors (we’ll get to that). So even by paying hundreds of dollars each month, you may not even be making a dent in the total cost of your debt.

Student loan refinancing can be a great way to reduce your payments and decrease the total cost of your debt — while shrinking the time it takes to get it all paid off.

Here’s how to get started.

10. Shop for cheaper car insurance

It may be a pain, but taking a few minutes to sit down and shop around can end up saving you big bucks! Here’s where to look and how to start shopping for a better deal.

Originally appeared on ClarkHoward.com. Continue reading 23 Ways to Improve Your Finances Today.