10 Popular Excuses for Not Saving Money

 

How come it's so easy to come up with excuses to not save money? Ask most people why you should save money and you will get only a handful of answers. But ask them why they are not saving money, then the list will go on and on.

I'm not good at saving money.

I have heard this one a million times. Couples will say "I'm a saver and my husbands a spender". Are people just built to be savers? Is it genetic to be a saveer? If dad was a saver will his traits pass down to you? To say you inherited your dad's lack of responsibility to save makes you look as stupid as your father. Either way, with so many personal finance websites teeming with information about finances can you get away with that excuse anymore.

I am to young to save, I'll save when I am older.

Don't young people realize the time to save is now. They don't have any major expenses like a car payment or mortgage. They don't have children or debt yet. They have a lot of disposable income. I guess living for today is more palatable than saving. They might believe that being so young they have all the time in the world to make up for it later.

I don't get paid enough money.

This is the perfect example of pointing the the finger at someone else. For this excuse to be valid you are either working for free or your just making enough for the bare necessities of life. Can either of these excuse be true, really? Why not one evening sit down and write out all the money your spending in a month and see where it's going. There must be someplace it's being misspent.

I'll save money when I hit it big.
This is the talk of the person waiting to win the lotto. Why do so many intelligent people say they are waiting for there ship to come in? Just look around, how many people do you know that have won the lotto or hit it big. I'll bet you know no one. It's never going to happen. Wake up and smell the coffee.

I have got bills to pay.

People claim there bank accounts are empty because of there bills or responsibilities. I'll bet in every budget there is a little fat that can be found. It takes a determined person to cut that fat out. It's always easier to spend the money on fun things then save.

I would save money if I wanted to, I just don't want to.

The best reason for not saving money is we just don' t worry about the future. The future will take care of itself. Being ready for future opportunities or disasters is why we save.

I work hard, so I can enjoy myself.

Everyone works hard to enjoy there money. It's not right to not not spend on some enjoyable things along the way. But it's better to pay for those good times with cash and not debt. Saving will make that happen.

Money is made to be spent.

This is true. But it sure does feel good to have a nice cushion of savings to soften the blow of retirement. The goal is not to take your savings when you die, but to save money so you enjoy a secure and debt free life.

I am getting a big inheritance, there is no need to save.

If this is true for you than that's great. But for most of us this is not true. But this excuse does seem rather shallow because your being lazy now because later someone else will be footing the bill.

Why save if I am going to spend it later.

This by far the dumbest of all excuses. Having the security of savings only makes your life better and more enjoyable. It's an intangible feeling only brought about by having savings.

What is Flood Insurance and How Do I Know If I Need It?

It's that time of year again when the home insurance policies are due for renew. I got my homeowners policy and in a couple of months the flood insurance policy will follow. My mortgage company requires me to have flood insurance because my home is in a flood zone. It's a good idea because your home owners policy does not cover damage by rising waters. I'll probably never use it but I sleep better knowing it's there.

With hurricane season approaching it's better to be prepared. Some people make the mistake of thinking damage caused by rain and wind from a hurricane are covered by the homeowners policy. Many people in New Orleans made that mistake when hurricane Katrina came through.

So, if your lender doesn’t require flood coverage that obviously doesn’t mean you are safe from flood risk completely. Every home is at some type of risk for flood damage. So, how do you know what type of risk zone your home is in?

Your best bet is to visit the FEMA Flood Insurance website FloodSmart.gov and Safety.com for more information. They have a flood risk profile tool where you can type in your address and assess the flood risk of your home: FEMA Map Service Center. The results page will also show average flood insurance premiums in your area.





Don’t want to take their word for it? FEMA also offers online flood maps which are used to determine flood risk for each property. You can visit the FEMA flood map for your property to see exactly where the flood zone lines are drawn in your neighborhood.

These maps are only estimates of your home’s flood risk and should not be taken too literally. Many homes that are in “low risk” zones may experience a significant flood at some point- so it is always a good idea to purchase some flood coverage if you want to be completely protected.

In the event of a disaster, a home inventory can be your greatest asset. If your home is lost in a covered peril, your first call will be to your home insurance agent and your task of proving what was lost will begin. Will you remember everything you owned after it is gone? Especially in a time of crisis? Having a pre-established home inventory will take the headache out of that task- leaving you to focus on more important things.

Here is a checklist you can download to catalog all your belongings.

Download as Microsoft Word (261KB) 

Download as Microsoft Excel (47KB)

It's also a good idea to get out the video camera and do a room by room video inventory of your belongings. Be sure to open all the closets and record video of all your clothes, shoes, coats, and stored items. Get pictures of all special items like computers, electronics, tools, jewelry, etc. Be sure to note model numbers on expensive items.

If you have an iPhone, there's an App for that. Check out MyHome Scr.APP.book over at iTunes.

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.

If There Is A Goverment Shut Down, What Services Will Be Curtailed?

Image via WikipediaCongress has till Friday to finish it's work on the budget, if it doesn't, the government will shutdown. What does it mean for the government to shut down? How will it hurt the average citizen? Democrats and the President say it will hurt Americans deeply. What does that mean, I am not convinced. Let's look at the facts.

Fact: Only one in four federal employee would likely be furloughed, that's 800,000 workers. These workers would not be connected with any services connected to human life or protection of property. That's according to a 1981 law called the Deficiency Act.

What would stay open?

Armed Forces. The troops would continue to work and Congress is trying to pass a law to ensure they are still paid. Border security would be operating and our ports and airports would still be open.

Secret Service. The president would still be protected.

Airport Traffic Control. All traffic controllers at airport would still be at their job. Even the good ole' TSA would still be patting us down.

Post Office. The Post Office would still be delivering your mail because it is a self financing service running on it's own funds, not needing taxpayer support.

Federal Reserve. Ben Bernanke would still have to go to work along with his whole crew.

Social Security. Everyone would still get their social security checks. But new applicant would have to wait till new funding arrives.

What will shutdown?

Passport Applications. If your in a hurry to get your new passport or a renewal, you are going to be waiting a while.

The Federal Housing Administration. If your dealing with the FHA you will be experiencing a slowdown in your application.

Internal Revenue Service. You will be waiting a little longer to get your refund. The IRS is not on the priority list of essential services.

Of course who is to blame for all this, you guested it, our friendly representatives in Congress. They have had since September of last year to get this job done. They have constantly voted to extend the passage of the budget till the last minute. The blame is squarely on their shoulders. Both parties

10 Ways to Cut Housing-Related Costs in Retirement

Image via WikipediaNot only is Morningstar.com is a great resource for all your investing needs, it has some great articles about the spending side of the equation. Morningstar's director of personal finance and author Christina Benz has a great article about how to reduce your housing costs in retirement. Housing costs in the accumulation years of your life can make or break the amount of money you save for retirement. It is even more critical when you are in retirement.

I like the way Christina speaks of your retirement as a "work in progress". Just as in your working life you have to adjust and readjust your your savings and spending, so also you must in retirement. It's not a set it and forget it. You are regularly having to adjust your plan for what life throws at you.

One of the largest expenses we all have to deal with in our lives is the housing expense. Even cutting costs in this department can make a big impact on your bottom line. The list contains many palatable to some unpalatable choices. It's not a one size fits all choice. It also depends on how much money we have to spend. According to our income, some may have to compromise our first choices for more affordable second choices. Lets get to the list.

1. Consider a Cheaper Location. Moving is no pleasure and moving to reduce housing costs has many tradeoffs. Leaving friends and family is a big downside to moving. So is moving to a location where there is less to do. The locales with more to do usually have a higher cost associated with it. What about the overhead costs of selling your home, buying another, and all the moving expense; this may be the downside. But when you sell you may be freeing up a large amount of equity that can help in your retirement goals.

2. Downsize in the Same Location. Here we have solved two of the problems of leaving freinds and family, also freeing up needed equity. Your getting an immediate reduction in monthly expenses and still enjoying all the comforts of staying in your city.

3. Consider Combining Households. Living with your grown children or relatives will save you money in housing expenses. It's beneficial for both partys financially. But if you have any relational problems it could turn out to be a nightmare. For the seniors in the home it may be a necessity someday to have family there to look after you should the need arise.

4. Don't Pay For Care Until You Need It. A choice of living in a senior assisted living home may be right for some. As we grow older and have the need for more daily care, if your already living in a retirement community that has assisted living care available if needed may be a comfort for some.

5. Consolidate Two Homes Into One. Some of us are lucky enough to have a home and a vacation home. It may be smart to access which of these homes you can sell. Try to figure out which home is under utilized. Either sell or rent the under utilized home for a financial benefit. If you sell a vacation home you can still rent in the desired location. And you'll have the flexibility of not being locked into one vacation destination.

6. Rent a Second Home at Least Part of the Year. Make your second home become a business by renting it out all year or seasonally to supplement your retirement income. Leaving the home empty only increases the financial drain on your cash flow. Having a plan of renting it a fixed number of years, saving the income for future needs may be what's needed for a faltering nest egg.

7. Refinance. Maybe it's time to refinance. This will lower your payment and also free up cash flow for other necesities. Tking some cash out may be the right thing to do if you have some other debts that need to be cleaned up.

8. Cut Loose Your Home Equity Line of Credit. Many lines of credit have a yearly fee. If so releasing this will free up that amount of money.

9. Apply for Property Tax Exemptions and Freezes. After your mortgage payment the property tax is your largest expense. Signing up for all the exemptions, freezes, and credits you can will only add to your cash flow. Also check if your assessment is correct.

10. Contest Your Home's Assessed Value. Check to see if your tax bill refects accurately your homes actual features like square footage and amenities.


I like these tips for reducing housing costs. They should be applied also to homeowners of all ages. It should be a part of your lifelong financial planning.


For further good information check out other articles by Christina Benz at Morningstar.com

Does Cancelled Debt Have To Be Reported On My Income Tax?

Image via WikipediaIt was worth it, you had to jump through a few hoops but that credit card canceled your debt. It was a great feeling not having to worry about that anymore. But you received in the mail a 1099-C that states you you owe taxes on that forgiven debt. Do you have to report it on your tax, you don't have to but expect a stern letter from the IRS if you don't.

Don't even think about ignoring it because Uncle Sam gets a copy of that 1099-C, too. They are going to be looking for it on your tax return. A Form 1099-C is issued when a debt of $600 or more is forgiven or canceled.

The IRS stated that the number of 1099-C's grew from 1 million forms to 1.9 million forms in 2008. Estimates for 2010 go as high as 3 million 1099-C forms. It's strange because people that couldn't pay their debts are now expected to pay taxes. So they will be forced to put the tax bill on their credit card and here we come full circle.

If you have $50,000 in debt forgiven , expect to pay $15,000 in taxes.

But be careful, all forgiven debt is not taxable. If you had a student loan that was forgiven because you worked in an under served community, it's not taxable. But the forgiveness of the remaining student loan balance after 25 years in an income-based repayment program is taxable. Given the complex rules, you should provide the 1099-C to the tax preparer. This applies only to a principal residence — not a second home. And the exclusion applies only if a foreclosure or short sale takes place from 2007 through 2012. The canceled debt must have been incurred to buy, build or improve your main home.

As with all things of this complexity, seek out a competent tax accountant to do it right.