7 Ways Retirees Can Better Manage Their Finances

Finance (Photo credit: Tax Credits)

When you reach retirement age, it is very important that you manage your finances. If you won’t continue working and will stop as soon as you start to receive your state and/or company pension, it is vital that your finances are kept in order. Here is how you can stay on top of your finances.

Create a budget

It is imperative that you make a budget. By writing down all expenditures, you’ll know exactly how much money has to be paid every month. When this is compared to what your pension is, you’ll know about any spare capital. When you have a workable budget, you won’t spend beyond your means.

Pay bills within days of each other 

If you have many bills to pay throughout the month, it is recommended that they are taken out of your account within several days of each other and not sporadically. Utility companies might enable you to change when payment is taken out of your account and your local council might offer several days every month when council tax payments can be deducted. When bills are taken out of your account within a few days of each other, you’ll be able to manage your finances more effectively.

Clear your debts

If you have a considerable credit card bill or any other form of debt to pay, this should be cleared as soon as possible. Setting aside a particular amount of money in your budget every month, your debt levels can be reduced. When you no longer have debts, your credit history will improve.

Choose a credit card which charges a low rate of interest

You might have many credit cards. However, this isn’t necessary because you should only have one credit card. If you have a credit card which charges a significant rate of interest, your bill will be very high if you don’t pay back what you owe to your credit card company. If you want to have a credit card bill, you should choose one which charges a lower rate of interest. Therefore, even when you don’t pay your credit card bill on time, you won’t have to pay a lot in interest.

Pay off your mortgage quicker

Although you don’t want to have any mortgage payments left when you reach retirement age, this might not be possible. If you haven’t paid off your mortgage before you retire, you could arrange a meeting with a mortgage adviser. Providing help about how a mortgage can be paid off quicker than it is at the moment, it is in your best interests to pay off your mortgage as soon as possible. This is because you won’t be liable for mortgage repayments anymore and you’ll have extra capital which can be spent elsewhere.  

Choose an ISA

The current interest rate for savings accounts is very low and as little as 1% might be given. If you have a considerable sum of money in your savings account, you won’t get as much in interest. However, an Individual Savings Account (ISA) can help because you can take advantage of a much higher rate of interest. More than 2% can be offered and some ISA’s give a 2.5% rate of interest. It is recommended that you find out about ISA’s which are being offered by other banks than where you currently have a savings account. This is because you could find an ISA which offers a better interest rate.  

Shop at other supermarkets

You might be spending too much money on your weekly shopping bill. Many supermarkets, such as Aldi and Lidl, are cheaper than Asda and Tesco and the same quality produce can still be bought. You could discover that up to 40% can be saved when you shop elsewhere. In fact, you might wonder why you haven’t shopped at other supermarkets before.

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College Financial Aid Choices Can Be Confusing - Infographic

When making plans for paying for your college education the process can be confusing. If you have ever filled out a FASFA form you know what complicated means. But many people make it through he maze of paper work because the government grants help take some of the sting out of paying hefty college costs.

This detailed infographic depicts the many different and complicated processes you have to go through to finance your child's college education costs. Gladly for me I only have to go through this one more year.

Brought to You by SNHU.EDU Online College Programs

Heritage and Service Still Exist In Financial Services

In today's financial environment, people find it hard to know who they can trust with their hard earned money. Many financial institutions we trusted all our lives, have let us down. Many people have lost faith and do not know who to trust. Finding a company, for your financial and investing needs can still be done, but you must be able to cut through the hype and find the truth of what a companies core really is.

One financial company that did not let its customers down was Perpetual, one of Australia's oldest financial institutions. They have been helping their customers manage and invest their money for over 120 years. They are not only a wealth manager but a leader in the trustee business. 

During Perpetuals long history they have been a leader in philanthropy. When Australians form charitable endowments, Perpetual is there to manage these funds and act as trustees over them. Today, these funds are helping sustain the efforts of charitable and non-profit organizations. Perpetual believes so much in philanthropy they have established their own in house "Perpetual Foundation" to help improve the life of others.

Perpetual also provides many types of investment products, financial advice, and corporate services to individuals, families, financial advisers, and organizations. Fitting the customer to the right investing style comes from knowing that customer well. Providing trustee and fiduciary services to help people protect and manage assets, is the goal of Perpetual.

There are still companies that believe in serving their customers. There are still companies that deserve your trust. Perpetual's experienced and award winning team manages over $200 billion dollars of clients money. In today's world, finding a company that has a heritage and core of serving the customer's needs is rare. Perpetual is one company that has the trust of so many, why look anywhere else?

Consumer Confidence Returning To Payment Protection Insurance

 (Image credit: Getty Images via @daylife)

Many consumers are still coping with the problems caused by the mis sold payment protection insurance policies. Naturally consumers are still distrustful of protection policies. But now negativity of the protection products is starting to wane and consumer confidence is returning.

The Financial Services Authority (FSA) has reported nearly £2 billion in redress has been paid back to PPI customers in 2011. Much of this has been because of the help to consumers from PPI claims companies.

The problems surrounding payment protection insurance are not because of the quality of the product but because of the way it was sold. PPI is a very helpful product to have because it protects you should you find yourself unable to work because of illness or accident. With its protection you will still be able to meet your credit card and loan payments.

Consumers realize that protection of this kind is needed because unforeseen circumstances due arise. Making preparations for illness or loss of job is on the minds of workers who have the responsibility of a family. The past problems of the mis-sold payment protection insurance is still a concern but help from ppi claims companies have alleviated much of the worry with their help in redress paid back to consumers.

The consumer has learned to question the products being sold at their banks and not just take them at their word. With this attitude, customers should benefit from more beneficial financial products.

3 Solutions To Reduce Your Money Stress

Image via WikipediaLife gives us an abundant amount of things to worry about. We worry about our kids, jobs, spouses, families, and just about everything else. According to the American Psychological Association, Americans number one worry is money. We think way to much about our debts, budgets, and especially our investments.

Stressing and worrying about your money causes you to make mistakes when you need to plan and supervise your finances. You need to find ways to reduce this worry.

1. Budget

The number 1 reason for money stress is you don't know how to handle your finances. You don't know how much money is coming in and also where it's all going. To fix this you first have to set up some structure of organization. It's no shame to be unorganized, most people are and it shows with their poor financial actions.

You need to set aside some time in a quiet place with all your bills, statements, check stubs, and pen & paper. At the top of the sheet write monthly budget. That's right we are going to make the dreaded budget for the month. At the top of the page list your total income for the month. Then list down the page all your expenses that you need to pay for the month. Don't forget to list expenses that you need to pay like once a year bills. List home insurance, property taxes, etc. Divide the bill by 12 and list the amount you need to save each month to meet the future payment.

Sit back and go through the list. You will see how much you make and where it is all going. Doing this process every month gives you a road map to ease any anxiety about your money. Any problems or issues will become apparent and then you will be able to address them. Worrying about your finances will cease to be a cause for concern.

2. Retirement  

Retirement is the number two cause of financial stress. When worrying about retirement do you picture yourself living in your children's garage surviving on cashing in aluminum cans. As we get older this worry seems to increase. Also when the stock market takes a nose dive and we see are portfolios drop by half the stress levels go through the roof.

Investing in general is a risky business at best. Appreciation of your portfolio is never guaranteed and if you like roller coasters you are a perfect candidate for the stock market. The first move to worrying less about retirement is having some money saved in the first place. That's why part of your budget has to include a monthly contribution to a 401k or IRA.

The other part of reducing the stress of retirement is having your investments diversified according to you risk tolerance. Having all your money in a narrow choice of investments only will lead to you losing money and causing worry. You need to find a balance between stocks and bonds. Also being very diversified in these to groups is important. With bonds you need long term, medium term, and short term. With stocks you need to diversify with international, small cap, large cap, etc. A great source for building a low stress, well diversified portfolio is financial advisor Paul Merriman. Check out his website at www.fundadvice.com.

3. Life

The last thing to do if you want to reduce stress is to take a break from your finances. After you set them up and become organized put them aside and live your life. Seek out new friends and experiences. Money isn't everything. Life is passing you by if you keep on the worrying track.

Real Resolutions For 2012

Image by ElvertBarnes via FlickrWith the Christmas season nearly over it's time to make some real resolutions for the coming year. I don't mean the typical resolutions to lose weight and eat better. Those are admirable things to aim for but usually fall along the wayside by the end of January. I want you to make some important resolutions that will put some money in your pocket and make life better.

Save more in 2012.

If your not saving enough or at all, it's time to do a better job. Next year the contribution limit for 401(k)s, 403(b)s, and the federal government's Thrift Savings Plan will increase by $500 in 2012, to $17,000. Here Uncle Sam is is allowing you to save $42 more per month in your retirement account. Take advantage of this and adjust you payroll deduction when you go back to work in 2012.

Low-income savers whose modified adjusted gross incomes are less than $28,750 for singles, $43,125 for heads of household, and $57,500 for married couples may also be able to claim the Saver's Credit, which is worth up to $1,000 for singles and $2,000 for couples.

If your putting money into a Roth Ira be sure you are putting in the max. Any other money you can save, outside of retirement accounts, can be put into a nice emergency fund.

Related post: Savings Plan Pays Off

Emergency Fund.

Is your emergency fund completed yet? If not why not address it this coming year. The key to staying out of debt is to have that rainy day fund ready. It's a vital part of a financial plan. It should be large enough to cover 3 to 6 months of your living expenses.

Related post: The 4 Ways to a Better Emergency Fund

Reduce Expenses.

It's a good time to go over your monthly expenses. Maybe you have some monthly subscriptions you are paying for that you no longer use. Cancel them.

Reduce your expenses of your cable bill, phone bill, or cell phone plan. Call your providers and see if there are any cheaper plans available. Every time I call my cell phone provider I learn of a reduced plan they are offering. They won't be calling you so it's your job to be proactive.

Are there any ways to reduce your utility cost? Find ways to use less water and electric. There are many new devices that can help you cut back without impacting your lifestyle.
Related post:  How To: Create A Budget

Insurance Bills.

Insurance companies are still competitive in there rates. I recently moved my car insurance to a new provider. I not only saving  $50 per month, I have the rate locked in for the next year. Even your home insurance can be reduced by evaluating the bill. Call your agent and see if you have coverage you may not need. I recently reduced my coverage on a detached storage shed on my property. By not insuring the shed I am reducing my costs by $40 per month.

Related post:  Car Insurance Discounts Are Waiting For You

Make Sure Your Will Is Up to Date.

If you have a will make sure it is up to date. If not then make any corrections needed. If you don't even have a will make it a priority to have it done in January. The best gift you can give your family after you die is an orderly transfer of your affairs.

Have Adequate Life Insurance.

Not everyone needs life insurance. The only reason to have life insurance is to fill a financial need if you die. It may be taking care of your young children, college costs, or paying of a mortgage among other things. Check to see if the benefit is an amount adequate to fill your purpose. 

Related post:  How Much Life Insurance Do I Need?

Make the coming year better than ever by getting you finances in order. Slowly the economy is getting better. Learn the lessons it has taught us and carry them on into 2012.

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3 Alternatives to Rising Prepaid College Plans

Image via WikipediaThe costs of a college education continues to rise every year. Many parents fear that college tuition will someday be unaffordable. In Florida, we have two options that the state provides to pay for future college costs. We have a prepaid college plan and a 529 plan.

Over the last few year the costs of the prepaid plan have skyrocketed. Now to enroll in the plan it will cost you $49,293 for four years tuition at a Florida public university. That comes to $298 per month until October before the child graduates from high school.

Florida Prepaid administrators blame it on a law that allows public universities to make hefty increases in tuition and other fees. The universities blame it on the economy.

To put it in perspective, I purchased this plan for my 11 year old when she was born and it only costs me $61.00 per month. So you can see why the current fees are so crazy.

What to do?

There are always alternatives. The safety of the prepaid plan versus the market risk of the 529 are features that must weighed by the parents. The time span for accomplishing the goal is a big benefit. But a few ideas below will get you started.

1. Take half of the $300 and invest it in a tax-free 529 College Savings Plan. The $150 put away ever month, should after 17, grow to $54,00 at an interest rate of 6%. But their is always stock market risk to consider.

2. A cheaper Prepaid Plan for enrolling in a 2 year community college plan would only cost you $48.00 per month. This would get your child halfway there on a college education. You could either borrow the rest or work during the the first to years of college and save the money for the last 2 years of tuition.

3. You could do a combination of both plans . Saving in a 509 college plan and paying for one of the cheaper prepaid programs.

The time will be here before you know it. Saving for college comes down to putting away a little money each month. It's the consistency of saving regularly and the accumulation over time that will result in the goal.

Before Buying A House Try A Financial Dress Rehearsal

Image via WikipediaYou have heard it all before, don't waste your money on renting, buy a house and pay yourself. Owning a house is one of the greatest pleasures you can have. Your place, with your name on the deed, there is no better feeling. I have owned two homes in my life and would highly recommend it. 

But what I wouldn't recommend is all the money it costs to own a house. You can never fully plan for all that will go wrong in your home. Whether it's the water heater leaking, the roof leaking, or the constant upkeep; sometimes you may wish you were back in that no maintenance apartment.

When buying a home there are many things to be considered. You need good credit. You need a down payment. You have to know the housing market so you don't over pay. That's just for starters, the real challenges begin when you move in.

I am the type of person who can sit down and write up a monthly budget with no problem. The numbers come easily after doing it for so long. I know my expenses and my income. It's easy to do because I know what I need to budget for. When you buy a home you are faced with the unknown of what to get ready for. Things will eventually break or need maintenance. It's not, if it will break, but when will it break.

Many people buy that first home and really don't know what they are getting into financially. So why not do a dress rehearsal to see how it could all fold out.

Make a list of all the new expenses you will have when owning your home. Find a perspective home you would probably purchase and use a mortgage calculator to figure out the payment. Add to it what the insurance, taxes, and expenses of owning that home. Take that number and subtract your current monthly rent. Are you able to save that amount every month for two years. If you can't save that amount every month, then you are not ready to buy a house.

Most people believe they can afford the monthly payment and all the extra expenses. It's true some people will be able to afford it, today. But in five years from now, what will be the expenses? They will surely be more. With a home being larger than your apartment, you will have the expense of more furniture and electric. Your yard will be bigger and your responsibility to maintain. What about a nice pool for the kids to swim in during the hot summer days. Don't forget the chlorine and other maintenance items.

You finally have that nice house all fixed up and decorated, but it's empty, it needs the sound of little feet running through it. Now the children start to arrive. Now your costs are rising and seem to never end.

A house is a big expensive financial burden that can sneak up on you with unforeseen expenses. Before you take the big leap into purchasing one, sit down and make a list of what it will REALLY cost you every month and year. Actually put the money aside with a phantom house budget and see if it will really work for you.

Learnvest.com Is A Mint.com For Women, Only Better

Image by Courtbean via FlickrLearnvest.com is a personal finance site for women. It's been around since 2009 but a recent cash infusion of $19 million dollars has allowed it to really become a real player in the financial aggregator field. It's trying to be a Mint.com for women. 


It was founded by entrepreneur Alexa Von Tobel, who wanted to design a website attuned to the financial needs of women. Learnvest.com, which has one million users, is launching My Money Center, which like Mint.com, allows women to aggregate all of their financial accounts, such as bills, credit cards, checking accounts, savings, 401K and more, to give users a comprehensive view into the health of their finances. Members can link all of their accounts into a Financial Inbox, which allows them to track their spending.


What sets it apart from similar websites is it's offering personalized financial advice via the LearnVest Advice Center, in which members can submit questions focused on their own financial situations and will receive a tailored response within a matter of hours. This is included in LearnVest’s premium membership, which costs $4.99 per day, $39.99 for three months and $129.99 for a year. The Advice Center also offers access to LearnVest Courses, which help women create a financial plan.

The word learn is in Learnvest because the founder of the website feels education is an integral part of being successful with your money. To help in this goal Learnvest has "BootCamps" where over a period of time you are educated in basic financial subjects. The three online programs, include a Financial Basics Bootcamp, Cut Your Costs Bootcamp, and Investing Bootcamp. Instead of creating a book-like online experience, LearnVest is making email newsletters the foundation of the educational sessions.

The integration between the bootcamp educational sessions and the user’s LearnVest profile is key to the success of the initiative.

Von Tobel explains, women need more tailored financial products in the same way that women join female-focused gyms. It’s about building sound financial habits, she explains, and a more personalized, tailored approach helps this.

There is a promo code, courtesy of Techcrunch.com, for a free one day pass for the premium service. Just enter the code ‘tc2011′ in the next week when signing up. Also there is another free day pass code "daypass2011", good till August 2.

How To Avoid The Dreaded 6% Real Estate Commission

Image via WikipediaThe prices of homes may rise and fall, and housing bubbles may grow and and bust, but one little number continues to live on, the 6 percent real estate commission.

I grew up in the real estate and home building business and I have heard many, many times the irritation the 6% commission can cause. I would hear my father and grandfather complain every time they had to pay this fee. Whether the home sold for $25,000 or $250,000, it didn't matter.

It's a lot of money to pay for a service when margins can be very slim. Over the years there has been many negotiations, with brokers, to try and get it lowered. Some agents remain firm in their belief that the 6% commission is fair and well earned compensation for providing a necessary service. Real Estate offices have expenses and overhead. They pay for promotion and advertising. The legwork, phone calls, paper work, and negotiations use up a lot of time and money. Still, there are alternatives.

• Before settling in on an agent ask if they will accept a lower commission, maybe 3 or 4 percent. Even a reduction to 5% would save you a lot of money.
• If the buyer does not have an agent, your selling agent does not have to split the commission, so they may be more inclined to reduce their commission. Of course, negotiate this point before hand.
• If the agent that sells your home will also help you find another home to purchase you will be able to negotiate a even lower commission because of two home sales.
• Most real estate offices are quite large and must split the commission with the broker or even a home office, in case of it being a large franchise company. So it would be a good idea to find a smaller real estate company that would be more willing to take a reduced commission.
• Find a real estate office that will list your home for a flat rate. If your willing to do all the work in selling your home you could find a company that will just put your home listing in a multiple listing service. Companies that offer fewer services may just be willing to charge you a couple hundred dollars for using the Multiple Listing Service(MLS).
• If you have a real estate license for your state, whether you are buying or selling, you are entitled to half the commission. Check this for your own state. 
• Sometimes the negotiation process is at an impasse, it may break the impasse if the broker takes a percent off his commission to entice the seller to close the deal. 

There are many ways to get around the 6% commission. There are many real estate offices willing because of the tough times to take a cut in commission just to make a sale. The way to get this right is to shop around until you find a broker willing to take a reduced commission.

Proposed Changes to the Mortgage Interest Deduction - Can You Live Without It?

Image via WikipediaOur friends in Washington are talking about limiting or eliminating the mortgage interest deductions. This could be disastrous to people who bought a house counting on using that deduction. This would change the equation for many families who would have to pay much more in taxes. What would be the affect on the already down housing market, would it send it even further downward?

I don't think the politicians would have the courage or political will to eliminate a deduction most home owners count on. The mortgage interest deduction is the largest deductions that people use on their tax return. But I think they will do a little tinkering with it in the years to come.

I believe the congress does feel safe to cut the deductions on the extremely rich. Today, the deduction does have limits. You only can clain mortgage deductions on mortgages up to $1,000,000. It's proposed to move that limit down to $500,000. In most of the U.S. the average house sells for $200,000, so the change wouldn't effect many people. But on the West Coast, the average house price is $600,000, so many non-rich families would be effected.

Still another proposal would eliminate the deduction all together and just issue mortgage holders a tax credit.

What To Do?

If you have a mortgage of $500,000, it looks like your safe. The deduction probably won't change but if it does, it will probably turn into some type of credit.

If you have a mortgage of more than $500,000 you may lose some of your normal deductions. You may be wise to pay down your mortgage to get you under the upper limit. On the bright side, this changing of the deduction might encourage homeowners to buy a less expensive home so as to live more within their means.

Will Renters Be effected?

If the mortgage deduction is reduced will landlords pass on the extra taxes paid, onto the tenants? Here the congress has a way to fix that problem and that is to pay the renter a renters credit to off set the additional rent charge. But hopefully the coming changes would not effect investment property.

My normal interest paid on my mortgage comes to $10,000 per year. It's my largest deduction and any change would increase how much taxes I pay.

Who Is Pushing the Hardest Against This Change?

The "NATIONAL ASSOCIATION OF REALTOR" is up in arms concerning this proposal. They claim it will drive down home prices by 15%. This drop in home values will also cause a drop in property taxes collected, thus harming local and state services. So even non-home owners will suffer from this reduction in the deduction.


We all are used to this healthy tax deduction. We all save quite a bit of money every year. The deduction is a great incentive to buying a home and even a second or vacation home. But reducing it seems to be the wave of the future. I remember when they eliminated the credit card interest deduction. The sky was supposed to fall then, it didn't. We survived and don't even miss it now or remember it. This is what will happen with the mortgage deduction, we will survive.

The 30 Year Mortgage Is The Biggest Financial Mistake You Will Ever Make

What makes the standard 30 year mortgage the norm for purchasing a home? The answer is if we didn't have the 30 year mortgage most people would not be able to afford the home they are in. The 30 year mortgage allows them to qualify and have an affordable payment. Affordable being a relative term. 

How it normally goes is that you find your dream house, you need to apply for a mortgage of $200,000. The rates are at 5%. You look into the payment on a 15 year mortgage and it is $1581 a month. You could probably swing it, but your hesitant. Your mortgage broker says you can get a 30 year mortgage and the payment would be only $1073. Yes, a $500 savings. You could really use that $500 for a lot of other things. It's temping and you decide on the 30 year. Bam. You just made the biggest mistake of your life.

By taking the 30 year mortgage, over the 30 years, you will of paid $100,000 more to the bank in interest. For that $200,000 house you will have given the bank $386,511. If you had a 15 year mortgage, you will only have to give the bank $284,685 over a 15 year period. What could you do with that $100,000 if you could of kept it in your pocket. What things were you not able to do because you gave all that money away? I have an alternative.

The 30 Year Home and Retirement Plan.

Start with the same $200,000 house purchase. Apply for the 15 year mortgage. Make the payments and pay off your house in 15 years. It's doable. Fifteen years will fly by and you will have a paid off house. Now your living in a paid off house, right? Take the same house payment and invest it every month. Put it in a stock and bond mutual fund or ETF's. Do this monthly investment for 15 years. Your writing checks as if you were paying on a 30 year mortgage. But now you are paying yourself.

If your investments grow at a rate of only 8%, which is a conservative percentage, at the end of 15 years your investment balance will be $547,089. Next step quit your job and retire. Your house is paid off and you have more than a half million dollars in the bank. If you wish to continue working 5 more years, continue with the plan and continue to make the monthly investment. At the end of the 20th year your balance will be $931,246. Almost one million dollars, now please retire.

"The 30 Year Home and Retirement Plan" will take planning and discipline on your part. It's a long term plan that will take good budgeting and sharp planning. The heart of the plan is the 15 year mortgage. The hardest part will be your determination to have a 15 year mortgage. It's so tempting to get a 30 year mortgage. I can hear the reasons for having a 30 year. I have heard all the excuses. With a 30 you have a lower payment and more cash flow to do other things in life. You may claim you will pay of the 30 off in 15 years. You just want the leeway in case some trouble comes down the road. The best thing about a 15 year mortgage is that it always pays off in 15 years.

The ground rules for this plan to work is you need to purchase a home that is affordable to you. It must not be so pricey that the payment makes you house poor. What is an affordable payment? The rule of thumb is only purchase a home where the payment is 25% of your income. If you earn $4000 a month, then largest house payment you can afford is $1000.

It's your choice. Make payments for 30 years to the bank or make payments for your home and to your future.

Is It Finally Time To Get Organized?

With tax season almost over it's a great time of year to go through our files and get organized. I have just gotten all my paperwork back from the accountant and i would like to get organized. But what should I keep and what should I throw out?

What	How Long to Keep	Why
Tax returns (including receipts and supporting documents)	Up to six full years	The IRS can audit a return up to three years after you've filed. The agency can challenge your return for up to six years if it suspects you under-reported your income by 25% or more.
IRA contribution records	Permanently	Keeping these forms — like IRS Form 5498 and 8606 — may prevent you from paying too much tax when you tap your retirement stash.
Investment and real estate records	Seven years after you sell	They help track your cost basis — and the taxes you owe when you sell; shred your monthly statements and save the annual summaries.
Bank statements and checks	One month to seven years, depending on whether your bank has them available online	You could need them if you're audited by the IRS. If you haven't already, switch to receiving your bank documents online. Your bank may have past statements available online.
Credit card statements and bills for non-deductible items	Shred immediately after the next statement arrives	You don't need them once you confirm the charges and have proof it was paid.
Form W-2: Wage and Tax Statement	Until you start receiving Social Security benefits	Usually your best proof of earnings for Social Security
Pay stubs	Until the end of the year	Not needed once you get your W-2
Insurance policies	Until they expire — except for liability policies with "occurrence" coverage	Occurrence-based policies cover you for damages that occur while the policy was in effect — even if the claim happens after coverage expires.
Receipts	Day-to-day debit/credit: Toss after confirming the amount charged is correct. Big-ticket item: Keep with other purchase documentation for proof of value in case of loss or damage. Charitable donations: Store and keep for tax-filing purposes.	Depending on the type, amount and reason for the purchase, they may be necessary for insurance- and tax-filing.

Needless to say keeping documents safe means either a fireproof safe or a safety deposit box. There are many new services that will scan your documents for storage online or on disks. Try Shoeboxed.com

Why You Should Have A Will.

Image by julianrod via FlickrI was over at my lawyers office this week to modify my will. I remember going many years without having a will. It was very foolish not having one because if you don't, you have given up any say in your affairs after your death. You take such good care of your life and family during your life, why not provide direction after your gone.

What is a Last Will and Testament? Most of us think we know what a will is, but do we really? If you said that a will is a document where a person declares who gets his or hers assets upon death, you are only partly right. A will does much more than that.

Guardianship of your Children.

Do you ever wonder who your children will live with after your gone. They may go to relatives you don't approve of, if your wishes are not stated in a will. If you have children under the age of 18, a will is the place where you declare whom you want to be the guardian in the event of your death.

The courts will decide who gets custody of your minor children based on what is in your childrens's best interest, but judges will give great weight to the stated wishes of a child's natural parents. Judges can't do this unless you have stated those wishes. And the place to state them is in your will.

Administration of Your Estate.

You don't have to be rich to want to ensure that after your death your property and assets are not squandered or stolen. A will is the place where you appoint someone you trust to administer, manage and distribute your assets. If you don't appoint someone to do this for you, the court will appoint a total stranger to serve in this capacity for a fee.

Guardianship of Your Children's Property.

Minors do not have the capacity to contract and therefore do not have ownership rights to property. An adult must be appointed to manage a minor's property until the minor becomes of age. But even after your children reach the age of 18, you probably won't want them to have full ownership rights to your property because if they are anything like I was at 18 they'll probably blow it all in beer. A will is where you not only decide who gets your property but when and how they will get it.

Separate Writing

Florida law allows you to keep a list of special items you wish to leave to certain benificiarys upon you death. This list may be updated by you at anytime without the need for revision of or amendment to your will.

Some examples:

• An engagement ring to a niece
• A baseball card collection to a nephew
• A library to an grandson
• A photo album to a brother

Living Will

Sounds like a contradiction in terms, right? Well, a Living Will is a document that tells your healthcare provider under what conditions you wish not to be revived. It is an essential part of your estate plan. In it you will name one or more health care surrogates who are empowered by you to make decisions about your health in the event you are incapable of doing so.

Durable Power of Attorney

A durable power of attorney is a document that you execute authorizing someone of your choosing (usually a close relative or trusted friend) to handle your affairs in the event you become incapable of doing so. Like the Living Will, this is an essential part of your estate plan.

For so long I put off having a will made. Don't make the same mistake. For only a few hundred dollars you can have piece of mind. This week make plans to see a lawyer and draw up a will.

The How, Why, And Who Of Home Remodeling And Dealing With Contractors

Image by The Library of Congress via FlickrAt sometime in the life of a home owner you decide it's time to remodel. The most common remodels are in the kitchen with new or resurfaced cabinets. The next on the list would be a deck or landscaping. Followed by a bathroom remodel. Being in the building business I found these three the most common requests.

When remodeling it's good to start with a budgeted amount you want to spend. Sticking to this budget is tough because you may underestimate what the projects cost or you go all wacky and want gold fixtures. Your spending a lot of money it's good to go slow in the planning and cost stage of the project.

You must keep in mind that when remodeling your home the money you spend must yield that amount when or if you ever sell. Putting extraordinary or opulent  additions to your home will never be monetarily  realized when you sell. In plain English it means, don't over build for your neighborhood. Keep the final product within the price level of the other homes around you.

Normal and practical additions include:

• Bathroom remodeling
• Master bedroom remodeling
• Bathroom remodeling or addition
• Family Room addition
• Roof Replacement
• Window replacement

Dealing with a contractor can be a pleasure or a nightmare. I am a licensed building contractor, and being around other contractors you learn the ones that do a professional thorough job are a rare breed. It's imperative to hire one that has been recommend by someone. It's a good idea to actually go see the work that was done by the contractor. When I hired a cabinet contractor my wife and I went to a customers house to check out the work.

• Get at least three written estimates
• Check references, including past clients
• Call the local chamber of commerce and Better Business Bureau to check for complaints
• Make sure the contract is clear and specifies what the job entails, including time frame, price and unforeseen changes
• Never pay in full, make a small down payment only if asked, preferable not. (Good contractors won't ask for earnest money)
• If Payment is not upon completion. Set up payments to coincide with work completed. Always hold the final payment till 100% job completion. No if's and's or but's.
• Make sure the contract has a 3-day rescission clause to protect you should you change your mind.
• Ask if the contractor will do the work or will it be sub-contracted
• Check all permits, licenses and insurance needs are meet by the contractor. Check and double check these.
• Make sure inspections are carried out by proper building department people.
• Hold the contractor responsible for cleanup and any damages that should occur during construction
• Make sure materials called for are used.

I have a pet peeve with contractors so I always scrutinize them carefully when working with them. It reminds me in the movie "The Naked Gun", at the end of the movie the bad guy is caught and asked the question, "How can you be so evil?". The bad guy responds, "Don't forget, I spent three years as a building contractor." This always cracks me up because I know so many bad contractors.

Reader: What's your experience with remodeling and contractors?

Financial Advice is Everywhere - But What do People do with it?

Image via WikipediaWhat is the financial literacy of this country? How many thousands of financial blogs are there? There is a money section in every newspaper. We have Money Magazine, Kiplinger and others magazines. We have Suze Orman and Dave Ramsey on TV and radio. With all this good information, why is so much of the population in a financial mess?

 Where has all this information gotten us? We are in a level of indebtedness that some think is dangerously high? People are out of work and they are afraid. With all the help out there to many people remain ill-equipped in understanding money matters.

 I propose there is to much focus on information and not enough on how it relates to real people. Author Bruce Sellery new personal finance book called Moolala: Why Smart People Do Dumb Things With Their Money (And What You Can Do About It) contends "We have given everybody more information than they can ever possibly consume, without giving them insights,”.

  Sellery describes how people were not grasping the informations financial lessons. He’s developed workshops on handling money and he’s written Moolala, a very approachable, self-help book full of quotes from people he’s worked with.

 He describes a couple he was advising who had a six figure income, money in mutual funds under performing the index's, no college fund for the 2 children and 2 new cars in the driveway.

His plan for the couple was what he called the "Priority Pyramid". Starting at the bottom:

Cash Flow. Are you earning more than you are spending? Maximize income and minimize expenses.

Debt. Have you eliminated useless credit card debt? Living below your income would help this.

Savings. Are you saving enough to meet your goals. Whether they are retirement, a car or putting the kids through college.

Taxes. Are you taking care of the tax implications of your investments by using tax free or tax deferred accounts.

Investment Performance. Are your investments keeping up with the benchmark indexes. If not why not just invest in the indexes?

Optimizing Investment Returns. Using other strategies to maximize gains.

After reading a little of Mr. Sellery's advice I don't see he is much different than any other financial guru. I see the same advice as all the rest. There is nothing new to his book.

Mr. Sellery retreads the golden oldies of personal finance. If your a new comer to the personal finance world take heed of these principles they are golden. But knowing something and doing something is to different things. The author makes the point that you have to change your behaviors to carry out your goals. You're in the mess you're in now because of your behaviors. You have a basic understanding of spending and saving, everyone has, but you don't focus on it. 

Financial knowledge is only the tool you use to get to your goal. It's like like buying a diet book or joining a gym, they're tools to a purpose. The knowledge is a tool. Your problem is your sitting there waiting for the tools to do the work, ain't going to happen. 

To make this money thing work you have to change. You must change on the inside, no book will do that for you. If your a spender, stop spending. If your not making enough money, do something to make more money. You need to turn the ship around and just do the opposite of all the dumb things your doing. You don't need to be a genius to be a winner with your money. 

Related articles

• Suze Orman's Tips for Earning More, Surviving Unemployment (dailyfinance.com)
• Cents and sensibility (financialpost.com)
• Why smart people do dumb things with their money (theglobeandmail.com)

Tips To Help You Talk Money To Your Sweetheart

Image by Sister72 via Flickr

This past Valentines Day just brought out the best side of me. When my wife and I talk about money these days it's good to know it won't turn into a knock down drag out fight like it used to. We have learned to talk calmly about money and practically know how the other will respond in any situation..

During are early years of marriage money was very tight. We were combining families and lives. It wasn't easy because most of our fights were about money. We both came from different experiences with money. Our families handled money differently. We had to get used to each other and also our spending-saving habits.

I found that the number one thing to solving money issues was communication. We had to check our baggage at the door and talk openly about the reasons for our differences. We had to be careful not to be hurtful and try to resolve little issues before they festered into big ones. Having those smaller open discussions headed off the potentially bigger ones down the line.

With so many differences we had to find common ground. We tried not to dwell on our past experiences but we set goals and figured ways to arrive at them. It wasn't easy but we kept trying. There was some times when the wheels came off the wagon. But with time and patience we persisted.

We found out early that if we didn't do the math and have a game plan but just relied on our talks we would fail. Putting your goals in writing, setting up a spending plan and tracking actual household income and expenses was imperative to success.

When discussing all this financial stuff we had to methodical and not emotional think about what we we're doing and planning to do. We came together and didn't have a chance to stay together unless we were methodical about our plans.

Sometimes you have to lose a battle, to win a war. Each of us had to give up entrenched ideas and beliefs for the common good. This is very hard to do. Giving up habits that you know are good, but for the greater goals of the marriage, we had to agree to disagree.

Lastly we sought out professional help. Not a psychiatrist, because it feels that way now and then, but a financial expert. They will show you the things you overlooked and things to do, to make your plans happen.

Marriage poses many challenges. Sharing money decisions, in a caring way, will only strengthen your marriage. Not working together may cause your marriage to dissolve. Giving your trust to another is a big step. You trust your spouse with your heart, why not your money?

Reader, what situations cause money fights in your home? Or are you past that ?

Related articles

• A man's perspective on 'filling up your sweetheart's emotional tank' (knoxnews.com)
• Are You Talking with Your Family About Money? (moneyning.com)