January 2010 Vol. 5 No.1
• 7 Steps to Financial Health in 2010 • January's Home Value Improver • About Us

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.

  1. 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.

  2. 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.

  3. 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.

  4. 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.

  5. 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.

  6. 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.

  7. 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.

  8. 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!

January's Home Value Improver

Cozy Up Your Home

While everyone's taste in home d├ęcor 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
Westchester Mortgage

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