You'll be allowed to contribute an extra $500 to your 401(k) next year. Katie Lobosco of Money.CNN.com Shares Some Tips On What To Do.
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“What’s the difference between ‘paying yourself first’ and saving money?” — Ayesha
Paying yourself first is a way to save money. In fact, it’s the best way to save money.
The trick is that rather than setting extra money aside, you’re saving for yourself and your future goals right away, before spending the rest on non-essentials. Treat the savings goal like an important bill — just like your rent or mortgage — that must be paid every month. The only difference is it’s a bill you pay to yourself.
“Anybody can save the remnants of a paycheck after they’ve spent most of it,” says George Galat, a California-based financial adviser.
“[Paying yourself first] is purposeful, proactive and implies a level of progression toward a collection of goals,” says Galat.
Here are a few ways to pay yourself first — without feeling like you’re making a big sacrifice.
Set up automatic payments
A common obstacle to saving your money is that the amount you planned to save tends to dwindle toward the end of the pay period.
“The reality is that some competing interest always comes up to reduce if not eliminate well-intended savings,” says Howard Pressman, a Virginia-based financial adviser.
Related: What In The Wealth is an Annuity?
That’s why one of the principles of paying yourself first is to set up automatic payments into accounts set aside for retirement, debt repayment, or emergency savings. That way you don’t have to consciously think about choosing to save, and won’t be tempted to spend it first.
“If one has automatic savings taking place into the 401(k), Roth IRA or a sweep from checking to savings, it’s going to get done,” Pressman says.
Max out your 401(k) (if you can)
One of the first areas of your financial life you should pay attention to is your retirement savings.
But most people still aren’t saving enough. One in four workers have less than $1,000 saved for retirement.
Setting aside 10% or 15% of your income may seem daunting, but is not as impossible as it might seem.
When Jon Haagen, a New York financial adviser, asks people if they can save 15%, they usually disagree. However, when he rephrases to ask whether they might be able to live on 85% of their income, most say that they can.
“The second way of asking seems less daunting,” he says.
Change your mindset
Once you decide to pay yourself first, you may feel like you have a lot less money at your disposal than you once did.
The key is to change the way you think about your income, and accept that you need to — and can — live off less.
“It’s really about fooling your brain into thinking ‘this is how much I make and this is what I can spend,’ said Jeff Maas, a California-based financial adviser.
“Eventually you will adapt your spending habits to match your perceived income and it won’t feel like a chore or a sacrifice to save.”
Originally appeared on Money.CNN.com @laurasanicola
It’s a frightening statistic that 47% of Americans would struggle to come up with $400 to cover an unplanned expense. Yet nearly half of today’s workers are living paycheck-to-paycheck, with no financial cushion whatsoever, and a big part of the reason boils down to living beyond our means.
Now you might be thinking: I work hard for the money I earn, so shouldn’t I spend it? And there’s some truth to that. We all deserve to enjoy the fruits of our labor, but many of us take that to an unhealthy extreme by not only spending every penny we bring home, but exceeding our earnings and racking up debt.
If you’re not sure where you fall on the spectrum, here are some clues that your spending needs to be scaled back — immediately.
1. Your credit score is low
There are several factors that go into your credit score, some of which carry more weight than others. The two biggest, however, are your payment history, which speaks to your ability to pay your bills on time, and your credit utilization, which is the extent to which you’re using your available credit. If you’re living beyond your means and spending too much, you’ll be less likely to pay your bills in a timely fashion. Similarly, if you’re using a large percentage of your total credit line, it’s probably because you’re racking up too many charges and not paying them off quickly enough.
Credit scores can range from 300 to 850, but a score below 580 is considered poor, according to Experian, one of the three major credit bureaus. If your score has plunged into unfavorable territory, it’s a sign that your lifestyle is too large for your income.
Related: 5 Easy Ways to Improve Your Credit Score
2. Your housing costs eat up more than 30% of your paycheck
Housing is many Americans’ largest monthly expense, and while it’s natural to want to live in a home that’s spacious and conveniently located, it’s also easy to fall into a trap where you’re overspending on housing, and thus putting your finances at risk.
No matter how much you earn, your housing costs, which include your mortgage payment, property taxes, and homeowners’ insurance, should never exceed 30% of your take-home pay. If your current housing expenses surpass this limit, it’s a clear indication that you’re in way over your head.
Related: How to Reduce Expenses in Every Budget Category
Between 2011 and 2014, 52% of Americans had to make at least one major sacrifice to cover their housing costs, according to the MacArthur Foundation. These included delaying retirement savings and cutting back on healthcare.
Though you might justify an expensive home as your one indulgence, so to speak, taking on too much house also puts you at risk for higher-than-average maintenance costs, which can wreak havoc on your budget and compromise your financial security. You’re better off finding a less lavish home you can more comfortably afford — meaning, one whose total anticipated monthly costs equal less than 30% of what you bring home in your paychecks.
3. You’re not saving any money
Working Americans are generally advised to set aside a minimum of 10% of each paycheck for emergency savings or retirement. If your expenses are such that there’s absolutely no money left over each month to stick in the bank, it’s a sure sign that you’ve adopted too costly a lifestyle.
Now what if you fall into that category of people who are saving some money each month, but perhaps nowhere close to that 10% target? If that’s the case, your spending may not be too egregious in the grand scheme of things, but it could mean that you’ve already embarked on a very dangerous path.
If any of these circumstances apply to you, it’s time to start changing your ways — before your long-term finances take an irreversible hit. To start, create a budget that outlines your current spending, and compare it to what you’re getting from your monthly paychecks.
Next, work on cutting expenses so that you’re not only spending less than what you bring home, but have at least some money left over to add to your savings.
Related: 5 Methods to Help Your Save Money
You can approach your cost-cutting efforts in one of two ways. Some people prefer to slash one major expense, like housing or a car payment, to improve their financial picture. Others might opt to eliminate a number of smaller, less significant expenses, like cable, restaurant meals, and lawn or house-cleaning services. Whether you go with the former or the latter really boils down to which situation you think you’ll adjust to more easily. Some folks might have a hard time moving to a new home, and so they’d rather cut 12 other expenses to stay put.
Originally appeared on Money.CNN.com
When Apple co-founder Steve Jobs passed away, he left behind a huge legacy – and a huge financial fortune too. Since Jobs was one of the richest men in America, his family undoubtedly had no problem paying for his funeral and putting Jobs to rest.
Unfortunately, that’s not the case with many other Americans. It’s a sad reality that many families and individuals have to deal with, but the truth is that when many people pass away, their family members or close friends struggle to afford the funeral.
Knowing what to do when you can’t afford to bury a relative can help to relieve some of the stress and heartache of this difficult time.
According to the National Funeral Directors Association, the national average cost of a funeral with a vault was $7,775 in 2010. The cost of a burial without the casket was about $4,265 that same year. For many grieving families, paying thousands of dollars to bury a relative just isn’t economically feasible.
If a loved one passes away and the burial and funeral costs are out of your budget, here’s what you need to do:
Analyze the individual’s life insurance policy
Determine whether some or all of the burial and funeral costs are covered under the deceased’s life insurance policy. Talk to an agent in person or over the phone to go over all of the details, limitations and stipulations associated with the policy so that you understand what is and isn’t covered. You may find that a good percentage of the funeral costs are already covered based on life insurance the individual had on the job or a life insurance policy they bought on their own.
Review low-cost burial options
Cremating someone is usually less expensive than burying the individual in a casket or vault. If your state doesn’t require embalming the body, consider a “green burial” where you don’t have to pay for a vault, headstone or expensive caskets. You can also shop around to find an affordable casket online.
Consider getting a loan
If you have good credit and are comfortable with taking on a personal loan, consider applying for financing from a local bank or credit union in order to pay for the burial. Avoid taking out a cash advance on a credit card because you’ll be responsible for paying very high interest charges and could end up carrying that debt for several months, even years.
Ask other family members to chip in
You may not have to shoulder the responsibility of paying for the burial all by yourself. Consider asking family members to pitch in and help with the costs. Be specific and candid with relatives about how much the funeral costs; ask everyone involved how much they can reasonably contribute; and put together a cost sheet or budget to help you keep track of all of expenses.
Talk to your county coroner’s office
If you simply can’t come up with the money to pay for cremation or burial costs, you can sign a release form with your county coroner’s office that says you can’t afford to bury the family member. If you sign the release, the county and state will pitch in to either bury or cremate the body. The county may also offer you the option to claim the ashes for a fee. But if these also go unclaimed, they will bury the ashes in a common grave alongside other unclaimed ashes.
Obviously, when a person dies it’s a terribly emotional time for that individual’s family members and friends. But it needn’t cause financial turmoil too.
You can do yourself and those you care about a favor by planning ahead and making sure you at least set aside money or have enough life insurance to cover your own burial costs in the event of your unexpected death.
Originally appeared on BlackEnterprise.com by Lynette Khalfani-Cox, The Money Coach.
Gerri Detweiler shares her story of being an ID Theft Victim and what she is right (and wrong). Check out her tips to protect yourself from Identity Theft.
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By now I’m sure you have heard or read about Equifax’s massive security breach that exposed personal and financial information for over 140 million consumers.
I know what you’re thinking …
“What’s the Equifax Data Breach got to do with me?”
Well, not only were credit card and other credit account numbers acquired by the hackers … social security numbers, addresses and birth dates among other sensitive personal information were stolen. Your personal information may be among the 140+ Million consumers.
“WTW (What The Wealth) do I do now?”
I’m glad you asked. Here are 5 quick things to do right now.
Check To See If You Were Impacted
Equifax has created a new website for consumers to check if they have been impacted. Go to https://www.equifaxsecurity2017.com/potential-impact/ to find out if you are one of the ones impacted today.
If you are one of the (un)lucky ones impacted … hold up, wait a minute! Before you enroll in their program, read the fine print to make sure you don’t waive your right to sue them in the future. Look for the “Arbitration Clause.”
Get Free Copy of Your Credit Reports
You are entitled to at least 1 (some states may allow up to 2) #Free copy of your Credit Report from all three Credit Reporting Companies (Equifax, Experian and TransUnion) annually. You can also get a free copy of your credit report when you have been denied credit based on information in your credit report.
Go to http://www.annualcreditreport.com to get a free copy of your credit reports today.
Don’t worry! It’s easy and the website walks you through what to do.
Freeze Your Credit Reports
Each Credit Reporting Company (Equifax.com, Experian.com & TransUnion.com) has a service to Freeze your credit report so no one can access your information. They may charge a small fee to do it, but it just might be worth the investment.
Just remember to UnFreeze your credit report(s) before you apply for Credit.
Sign up for Credit Sesame
Get your Credit Score for #Free from Credit Sesame at https://tinyurl.com/ydgf4rkg. Just keep in mind that the credit score you will see is considered an “Educational Score” and will be different than the credit scores pulled and viewed by Financial Institutions.
Related: The Truth About Credit Scores for Consumers
Credit Sesame also has Identity Theft Insurance as well as a Credit Monitoring program.
Pay Attention
Stay abreast of what is going on with this data security breach, as well as money tips and ways to protect and Cover Your A$$ets at https://www.madammoney.com. You can also send your questions to info@madammoney.com.
[ctt template=”8″ link=”cbtba” via=”no” ]Knowing what is on your Credit Report will make it easier for you to identify changes and take the necessary action immediately.[/ctt]
Post your tips below and don’t forget to #Share this info with everyone you know. 
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