Lite Rock 105 & Washington Trust's Money Minute Blog
LiteRock 105 & Washington Trust are happy to bring you tips and information every weekday on how to keep your finances in order and safe. Check back every day as we give you our on-air audio reports from Jones & Heather in the Morning and Tony Bristol, our blog and your comments. We're here to help your financial present and future.
Give Yourself an Annual Financial Check Up Part 3
Many people get an annual medical check-up but neglect to take the same care with their finances. Reviewing your financial affairs regularly can help you reach your financial goals faster, potentially save on taxes, and give you peace of mind. Here are some areas to consider:
Are you saving for a child’s college expenses? Have you investigated Education IRAs or 529 Plans?
Regarding investments, do you have an asset allocation plan to serve as a framework for your individual investment decisions? Does your investment strategy match your time horizon and risk tolerance? A qualified financial planner can help ensure that your investments are on track to achieve your financial objectives.
Take control of your financial future by giving yourself an annual financial check up.
Give Yourself an Annual Financial Check Up Part 2
Many people get an annual medical check-up but neglect to take the same care with their finances. Reviewing your financial affairs regularly can help you reach your financial goals faster, potentially save on taxes, and give you peace of mind. Here are some areas to consider:
Are you saving for a child’s college expenses? Have you investigated Education IRAs or 529 Plans?
Regarding investments, do you have an asset allocation plan to serve as a framework for your individual investment decisions? Does your investment strategy match your time horizon and risk tolerance? A qualified financial planner can help ensure that your investments are on track to achieve your financial objectives.
Take control of your financial future by giving yourself an annual financial check up.
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Give Yourself an Annual Financial Check Up
Many people get an annual medical check-up but neglect to take the same care with their finances. Reviewing your financial affairs regularly can help you reach your financial goals faster, potentially save on taxes, and give you peace of mind. Here are some areas to consider:
Have you analyzed your monthly spending to identify ways to save? Do you have a household budget?
Have you calculated your retirement income and asset needs? You’ll find calculators for doing this on our website (www.washtrust.com).....or on many bank websites (if you don’t want to be specific)Are you taking full advantage of your employer’s 401k or other retirement plan? Are you going to make an IRA contribution? Should you consider converting your IRA to a Roth IRA? A qualified financial planner can help ensure that your investments are on track to achieve your retirement objectives.
Estate Planning: The Basics
Estate planning means providing for your family after you are gone. It allows you, not the court, to make important decisions about caring for your loved ones and to control what will happen to your property.
With a proper estate plan, you can choose the person who will settle your estate – you want someone who is qualified, trustworthy, and understands your wishes.
You can protect minor children by naming a guardian and making decisions about their future financial security.
You can designate who will receive your assets – trusts may be useful for ongoing management and distribution.
And you can minimize the costs of administering your estate – proper planning can reduce probate fees and any estate taxes.
Ways to Accumulate a Down Payment on a Home Part 2
Buying a home, especially a first home, is a big financial and emotional step. Make sure you do your financial homework: Investigate your mortgage options. Determine what level of monthly mortgage payment will be affordable and comfortable. And establish some discipline for saving for your down payment. A good way to do this is by enrolling in an automatic savings plan and having a certain amount transferred from your checking account to a dedicated savings account each month.
Many parents are willing, even eager, to help their children with the purchase of a new home. Be respectful of their generosity.
You can also trim expenses and save more by skipping a year’s vacation, eating out less, and deferring non-essential purchases.
Ways to Accumulate a Down Payment on a Home
When buying a home, the amount of your down payment will determine the size of the mortgage you need. Saving more for your down payment will reduce your monthly payments. And saving faster will help you get into a new home sooner.
Here are several tips for building funds for your down payment:
Enroll in an automatic savings plan and have a certain amount transferred from your checking account to a dedicated savings account each month. Consider a money market type of account to earn higher interest.
Move to a cheaper apartment while you accumulate your down payment.
Reduce high interest rate debt by paying off your credit cards.
Planning a Vacation – Save Now or Pay More Later
Planning a vacation is fun. And with a little financial foresight, you can help ensure that it’s everything you want it to be – fun, carefree, and memorable.
As tempting as it may be to just charge your vacation on your credit card, the costs of doing so can be significant. Consider the following:
If you’re planning a $7,500 vacation and save for 12 months, your total cost could be closer to $7,400 because you will earn interest during the year.
Conversely, if you return from your vacation owing $7,500 on your credit card and then pay it off in 12 months, your total cost could be closer to $8,200, depending upon the interest rate on your card. Now couldn’t you find better ways to spend the $700 that is going towards interest – say, like extending your vacation a couple extra days?
An Easy Way to Save for Any Reason
We all know that having more money is better than having less money. Whether you are planning for a major purchase – a car, vacation, or education – or simply saving for a rainy day, a certain peace of mind comes with having a larger balance in your account. And there’s no easier way to save than with an automatic savings plan.
How much do you want to save? The choice is up to you. If you are already using direct deposit for your paycheck, have your financial institution transfer a set amount each month into your savings account. You can also set up automatic transfers to your savings account through online banking.
By depositing funds each month into your savings account automatically, you’ll build assets, and may not even notice that you have less to spend.
Teaching Your Children To Give Something Back
Here are ways that parents can plant the seeds of social consciousness in their children while providing guidance on how they can share with others:
In birthday party invites, ask your child’s guests to omit gifts and instead bring a donation to a charity that your son or daughter has chosen. Have your child present the donations to the charity in person.
You can also set up a charity jar in your kitchen and encourage everyone to put loose change in. Discuss as a family where you’d like the money to go and then present your donation together.
And always encourage your children to volunteer. By working at an animal shelter or doing yard work for an elderly neighbor, they will learn that sometimes the most precious gift we can give is the gift of ourselves.
Should you refinance your home mortgage?
Should you refinance your home mortgage? Housing costs are one of the largest components of most household budgets and rates change frequently. It makes sense to periodically review your mortgage to determine whether refinancing at current interest rates can save you money.
To determine whether you should refinance, compare the costs of obtaining a new mortgage with the savings you will enjoy with a reduced interest rate. Also consider refinancing a larger or smaller amount than your current mortgage balance. If you have excess funds available and believe it will be difficult to earn a return greater than the current mortgage rate, you may want to pay down your mortgage. If you have other liquidity needs, you may want to refinance a larger amount to free up some of the equity in your home.
Marriage and Money
If you are newly married or planning to get married soon, take time to consider your financial future as a couple. Marriage will change how you handle your finances, and you will be well-served by some up-front planning and discussion:
• Are you going to have individual checking accounts? A joint account? Both?
• How much of each of your incomes is going to be used for normal household expenses?
• Who is going to pay the monthly bills?
It’s important for spouses to know how one another feels about financial issues such as saving for retirement, taking risks with investments, and making current sacrifices in order to save for a child’s college education. Discussing financial matters now may not only avert future problems; it may also bring you closer together as a married couple.
Certificates of Deposit
Certificates of Deposit, or CDs, can be an ideal way to invest funds that you don’t need in the near term. They are time deposits with maturities that usually range from 30 days to as long as 10 years, with higher interest rates for longer maturities.
When choosing a CD, it’s important to consider your liquidity needs and to note that interest rates will change over time. An alternative to choosing one CD with one rate and term is to use a “laddering” strategy. Spread your money equally among one-, two-, and three-year CDs, and as each CD matures, reinvest the proceeds into a three-year CD. Over time, all your funds will end up in higher-rate three-year CDs, and each year one-third of your finds will become liquid.
Reverse Mortgages
Why are reverse mortgages becoming increasingly popular with homeowners over the age of 62? A reverse mortgage can lower monthly expenses and provide supplemental income, making retirement more enjoyable and manageable.
A reverse mortgage lets you take advantage of the equity that you’ve built up in your home. You can receive a lump-sum payment, set up a line of credit, or receive monthly payments for a specific term or for life, all tax-free.
With a reverse mortgage, you continue to own your home and can live in it as long as you want. No one can ever take it away. You’ll never owe more than what your home is worth, no matter the size of the loan balance. And the loan has no impact on your Social Security or Medicare eligibility.
Home Equity Loans
The equity that you have in your home can serve as a convenient source of funds for home improvements, college tuition, or even buying a car.
How does a home equity loan work? A general rule of thumb is that institutions will lend up to where the total debt against your home is less than 80% of its current value. The interest rate charged will often be variable and tied to a published index such as the prime rate. You usually repay the loan in regular installments, with minimum repayments required. With some home equity loans, the minimum payments may only be the interest on the loan.
The attractions of home equity loans include favorable interest rates, potential tax benefits, and flexible use of the proceeds of the loan.
Reasons To Use Online Banking
Let's Talk About Buying A Home PART 2
Let's Talk About Buying A Home
Planning for Major Purchases or Expenses PART 3
Planning for Major Purchases or Expenses PART 2
Planning for Major Purchases or Expenses
Keeping Your Financial Life Simple PART 2
So here are a few ideas on how to keep your financial life simple:
Use as few credit cards as possible. Too many cards make spending too easy and may ultimately hurt your credit rating.
Use an automatic savings plan. By transferring funds each month from your checking account to your savings account, you’ll build assets, and may not even notice that you have less to spend.
Use direct deposit for your paychecks. This saves time, is safer, and puts your money to work for you faster.
Establish an organized system for paying bills. Store your bills in a single place and pay them on a regular basis before the due date.
Keeping Your Financial Life Simple
So here are a few ideas on how to keep your financial life simple: Deal with as few financial institutions as possible. This will cut down on mail, eliminate paper, and make your finances easier to understand.
An ongoing and solid relationship with one institution can also come in handy when you need to borrow money.
