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7 Steps to Financial Health in 2010 |
It's another new year and time again to reflect on your
life. Do you like where you've been and where you're
going? You are probably resolving to do some things
differently. Hopefully, you also will use this time to
assess your financial life. It's cold outside, and you're
likely stuck in the house. Now is a great time to take a
good close look at your financial past and
future.
- Look at your household budget.
You may not
realize that your child's hockey passion is going to be
a
budget buster. If you want to keep it up, where else
can you cut? I have a client who calls this the Pay Go
(pay as you go) approach. If you're spending X amount
of dollars on one new item, you need to cut that same
amount of money somewhere else in the budget.
Also, are there any household projects coming up in
2010 for which you need to budget? Remember to
consider not only the dreamy new bathroom fixtures,
but also that unsexy but necessary new pipe for the
washing machine.
- Face your credit card debt.
Ignoring your credit
card is never a good approach, but it is one that many
people employ. Now is a good time to take a close
look at your credit card debt and create a plan to bring
it down. Do you want to consolidate it? How about
switching to a different card with a lower introductory
rate? Take the time to calculate how much interest you
will pay over a certain span of time in all potential
scenarios.
If you have any zero blance accounts that have been
open for a long time, leave them open with no
balance. Closing old debt or having only new cards
can hurt your credit score. Finally, try to stay at about
50% credit utilization on your credit cards, e.g. don't
use more than $2500 on a card with a $5000
balance. If you exceed 50% it can hurt your credit
score.
- Examine your mortgage program.
It's easy to put
your mortgage payment on automatic in your online
bill pay, so take the first month of the year to figure out
if it is still working for you. Look at the rate you have
and find out if it is competitive. If not, think about ways
you can get a better one. You may find out you have
the most competitive rate or they aren't offering as
competitive rates for your loan any longer. But it is a
good idea to check.
Another way you
may be able to improve your mortgage program is to
consider a shorter term. For instance, the rates on 15-
year mortgages are usually better than those on 30
years. If you can afford a bigger payment now,
calculate how much interest you are paying over the
life of your mortgage and see if a 15-year rate works
for you.
You can even look into the logistics of how you
pay your mortgage. I have one client who hated that
while she got paid twice a month, the mortgage
payment was only once a month. That meant that she
always felt broke during one two-week period. She
called her mortgage company and switched to paying
every two weeks. That way, each hit hurt a little less.
Plus, she makes an extra payment every
year.
- Ask yourself about life changes.
People
understandably get so emotional about life changes -
weddings, births, inheritances, empty nesting, that
they forget to think about their financial implication.
Take an honest look at what you are expecting this
year and how it will affect your wallet.
- Reassess your retirement planning.
Examine your
retirement accounts. If you have changed jobs, do you
need to remove retirement money from one account to
another? Everyone seems to be talking about Roth
IRAs, so should you look into one of those? How will
your children's college savings be impacted by
retirement money? This is a great time to call your
financial advisor for a retirement plan discussion or to
find a financial advisor if you don't have one.
- Be sure your insurance is still working for
you.
Read over those insurance policies, or at least take a
glance at some of the numbers on your statements.
Are they still working for you? If your health insurance
has a deductible and you need a procedure, earlier in
the year is probably better for you. How about your car
insurance? Can you lower your monthly payments
with a higher deductible? Calculate out how much you
will save each month, and you might find the higher
deductible a better deal. Check out your life insurance,
homeowners, and disability coverage while you are at
it.
- Scrutinize last year's spending.
Remember that
those who do not understand history are doomed to
repeat it! Print out as many different year-end budget
reports as your little printer will allow (shhh, don't tell
the environmentalists) and figure out where you are
losing money. You may be surprised by what you
learn.
By taking the time this winter to put your financial
house in order, you'll be able to take enjoy a great
spring!
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January's Home Value Improver |
Cozy Up Your Home
While everyone's taste in home décor may differ, one
look that most people can agree on is cozy. Most
people want a cozy, inviting home that is a comfortable
place to pad around in slippers and be your sanctuary.
But how exactly can you increase the coziness level of
your home? Here are some basic rules designed to
make your home a cozy one.
Think food.
Who is not comforted by food? We all find food and
thoughts of it warm and inviting, so think about it when
you decorate your home. It's hard to beat Mother
Nature's artistic strokes, so a bowl of fruit on a shiny,
clean countertop will add a cozy, homey natural feel to
any space. If not a bowl itself, a drawing or painting of
fruit or other food always looks beautiful, as does any
fabric with fruit. A candy bowl also adds a nice warm
feel.
Music to my ears.
Soft background music also can make the home,
especially during mealtimes, a cozy, loving place.
Indoor fountains bring the best of the outdoors inside
and therefore add a warm, natural feel to your
home.
Go green-literally.
For low-cost warmth, green plants can be an effective
way to make your home look soft and comfortable.
Plus, you can put them in clay pots with paintings on
the side to increase the cozy factor even more!
Texturize your life.
Of course, the types of fabrics you choose to use in
your home are a personal preference. But, keep in
mind that furniture with a warm, textured fabric will
likely be more homey than cool, leather furniture.
Tossing textured blankets over the back of furniture
and at the foot of beds is a trick that bed and
breakfasts have always used to make their inns
welcoming.
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As we dive into a new year, the Massachusetts rules
and regulations that govern our bankers continue to
change. In response, banks continue to change their
own
regulations and lending practices.
Lending has gotten more restrictive than ever - we
have returned to the 45% debt-to-income ratios, down
from ratios that at one point were allowed to reach
60%.
100% financing is a thing of the past, so we need to
start saving again for our down payments. And it helps
to have a good relationship with a mortgage broker
who can give you the latest information and answer all
your questions.
I'm always happy to take your calls and emails
regarding home buying or refinancing!
Best regards,
Debbie Siegel
President
Westchester Mortgage
P.S. You're receiving this E-Newsletter because you have a prior relationship with me or with Westchester Mortgage. If I've sent this to you in error, or if you want to remove yourself from the list at any time, just click the "SafeUnsubscribe" link at the bottom of this e-mail.
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Click here for some great information
on home buying and refinancing!
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