The Secrets to Saving More Money

Knowing which accounts to use can help you save more

Today, there are manysavingsecrets_featured options for where to put your money. From using regular checking and savings accounts to deciding whether to open a money market account or a CD (certificate of deposit) to even opening an account for holiday savings — each offers something to help you save a little more.

Money market accounts and savings accounts
In an article in the Houston Chronicle, finance contributor Leigh Anthony compares these two types of accounts. Both offer interest on all deposits made and are insured by the federal government, making them safe, low-risk investment options.

Both account types also have a federal limit of six transfers per month out of the account. However, money markets act more like checking accounts, giving you the ability to write checks, make electronic transfers, and withdraw money with an ATM or debit card. With savings accounts, you can transfer money, but you may or may not be able to withdraw funds directly without talking to a bank teller, depending on the institution.

“Interest rates on savings account[s] are typically very minimal as there is not a minimum balance required,” reports Anthony. “[W]ith a money market account, the interest rate is higher and may fluctuate based on a schedule posted by the [financial institution].”

A savings account would therefore be more appropriate for putting away cash that you want to save for emergencies or a future large purchase, whereas a money market account would be better for savings that you need to access more often, such as for major home renovations.

CD accounts
Anthony also discusses the difference between a CD and a money market account. Unlike money markets, a CD account has a set interest rate that doesn’t change through the investment term. You can set this term from anywhere between 30 days and five years — and then sit back as your money grows.

Furthermore, according to an article in the Wall Street Journal, CDs are reported as low-risk savings accounts with an interest rate that could be higher than a money market account. The money is (probably) federally insured, “and you’re guaranteed to get back what you put in, plus interest once the CD matures” through its predetermined term. But make sure not to withdraw funds before the maturity term ends, or you’ll face a hefty penalty.

Holiday savings accounts
While some institutions offer actual “holiday savings accounts,” this term is broad enough to encompass savings specific for holiday spending. Many people spend a lot of their money during the holidays for gifts and family meals, and a great way to make sure you have funds set aside for these purchases is to open an account just for holiday savings.

“The key is to think about holiday spending the same way you would other recurring, non-monthly expenses, like annual insurance premiums, quarterly tax estimates and home maintenance. Set up an account, and automate deposits from your paycheck like any other bill,” says CFP® Tom Gilmour of LearnVest Planning Services in a November 2014 article in Forbes.

If you need more guidance on what type of savings account to open, contact us and we’ll be happy to help.

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Popular Personal Finance Blogs to Check Out

Some of the best online places to read up on money issues

Anyone can write a blog,financeblogs_featured and anyone can give advice about money … but which personal finance blogs strike the best mix of both personality and credibility?

In general, blogs become popular if their content and topics resound for their audience. The same goes for personal finance blogs. With such an impactful subject, it’s best to also garner a certain level of trustworthiness over time. Here are a few of the best personal finance blogs out there today:

The Consumerist
This blog site has had a huge following for years, which strengthens its credibility. In fact, The Consumerist made Time magazine’s list of the 25 best financial blogs in 2011, and also tops the 2016 list from Wise Bread — a noteworthy financial blog in its own right. Wise Bread uses factors such as site traffic, authority (measured by how often other credible sites link to the blog), social media influence (determined by number of followers) and reader loyalty (found using the number of RSS subscribers) to compose a “Wise Score” to rank popular financial blogs. Out of a possible 100, the Consumerist notched a 98.63.

According to Brad Tuttle of Time, followers love The Consumerist’s sharp-tongued attitude and how it caters to the habits of its audience, referencing its popular tournament-style contests, such as “Worst Company in America,” and click-bait headlines like “Who Sucks the Most: AT&T or Verizon?”

“The Consumerist’s followers love to complain,” Tuttle explains.

Check it out at https://consumerist.com.

Christian Personal Finance
This religious-sounding but not entirely religious blog is also on Wise Bread’s most recent list. Followers love its catered yet not pushy content.

“Despite the name, this blog doesn’t overwhelm readers with a Christian message (it’s present in some posts but not all),” says Cameron Huddleston of Kiplinger Personal Finance in her own article listing her favorite financial blogs. “For the most part, it just offers great personal finance advice anyone should follow, regardless of his or her religious views.”

Visit http://christianpf.com to see for yourself.

Money Under 30
This blog has been imparting wisdom to young people for more than 10 years, explaining the basics of how to break bad money habits and get on a path to financial stability. As with most blogs, the writer, Dave Weliver, derives his content from personal experiences; something his fans greatly appreciate.

“He’s still dedicated to helping 20-somethings avoid the money mistakes he made when he was younger,” Huddleston says.

Read some of Weliver’s articles at http://www.moneyunder30.com.

Mr. Money Mustache
Despite writing under an alter ego, Mr. Money Mustache is beloved by readers for his unapologetic authenticity.

“His name is Pete and he’s from Canada, but he prefers to describe himself as ‘a 30-something retiree who now writes ’bout how we can all live a frugal yet bada** life of leisure,’” references Miriam Ballesteros of the award-winning personal finance management site moneyStrands.

Indulge in Pete’s entertaining financial insight at http://www.mrmoneymustache.com.

Good Financial Cents
Despite the fact that this blog is written by a professional in the financial industry, it is a favorite of many, thanks to its wide range of relevant topics that noticeably lack fancy jargon.

“Certified financial planner and author Jeff Rose writes about investing, saving for retirement and paying down debt in terms anyone can understand,” Huddleston explains.

Find out more at http://www.goodfinancialcents.com.

As the number of personal finance publications shrinks and the field of financial blogs explodes, try these five sites first the next time you need credible monetary advice.

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How Much Should You Spend on a Car Based on Your Income?

Using your income as a base so you don’t overextend yourself

Buying a car is oftencarpricevsincome_featured one of the largest expenses an individual will incur, and most will finance such a purchase. It’s crucial to plan ahead so you don’t inadvertently buy a vehicle that you can’t afford.

“Because financing a car means committing to a monthly loan payment for a period of time, your monthly budget plays the biggest role in deciding how much to spend on a car,” explained Managing Editor Jamie Page Deaton in a July 2015 article in U.S. News.

Using your net income as a basis
Before you even start the car shopping process, you should know how much you can afford to spend each month. Then you’ll be able to narrow down your vehicle search to those that fit within your budget.

Start by getting out a piece of paper and writing down your monthly income.

“To calculate how much you have available to spend on your car payments, first take into account your essential monthly expenses. These can include mortgage or rent, utilities, phone, food and entertainment, savings, and other expenses,” reported an August 2014 CarFax article in its CarFox blog.

“The total from this [deducted calculation], your disposable income, is the amount you have left to cover the cost of your new car.” Note that this estimated number is meant to cover all car expenses including gas, insurance and maintenance, and not just the monthly payment for the car.

Calculations: example 1
CarFax suggested you spend 10 to 20 percent of your monthly disposable income on a car payment and expenses. As an example, CarFax shares calculations for an individual with a monthly income of $4,000.

“If your gross pay is $4,000 a month and you spend $2,165 on essentials like mortgage, food and utilities, your disposable income is $1,835 a month. Spending 10 percent of your disposable income would mean a $184 car payment. Twenty percent of this would give you a car payment of $368.”

Calculations: example 2
Deaton suggested a calculation model for spending ability at no more than 15 percent of your net monthly pay, as long as you don’t have major debt other than a mortgage.

As an example, Deaton posited that someone who makes $50,000 per year will likely take home an annual net income of $44,180 after taxes. He noted in a July 2015 article in U.S. News & World Report that other expenses, like health insurance and retirement saving, will likely lower this net amount and offered a monthly estimate of $3,681 in net pay for this example.

At 15 percent, this person should be able to afford, at most, $552 per month for all car-related expenses (not just the car payment). Taking into consideration the median U.S. insurance rate at $100 per month, and assuming this person spends $125 per month on gas and saves or uses $50 per month for repairs and maintenance; this hypothetical person will have $277 left over each month for a car payment.

“Plug this number into a car affordability calculator with a $2,000 down payment, 4 percent sales tax and a car loan lasting five years with no interest, and a car costing just under $18,000 makes financial sense for this person. Of course, this person may not qualify for a no-interest loan, and shortening the loan term will increase the payment. [He or she] could also lower the monthly payment by having a larger down payment,” noted Deaton.

If you do have more debt, such as from credit cards and student loans, Deaton advised you look at your total monthly debt as a whole in determining how much you can afford for a car. You’ll want to spend less than 36 percent of your monthly net income on your total monthly debt.

If you need more help calculating what you can afford, contact us and we’ll be happy to help.

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Tips for Getting the Best Auto Loan

Doing your homework before walking into a dealership can help you save

You’ve decided to buy a carbestcarloan_featured — whether new or used — and all you keep thinking about is how exciting it will be to drive home with a new toy. While car buying can be fun, doing your research before you walk into the dealership can help you save money. Consider these tips when planning your new purchase.

According to a September 2014 article on NBC’s “Today” show’s website by consumer expert Herb Weisbaum, before walking into the dealership, you should know your credit scores from the three major credit reporting agencies: Experian, Equifax and TransUnion.

“You want to check all three because you don’t know which one the lender will use and you want to give yourself time to fix any mistakes,” says Director of Consumer Education for Credit.com Gerri Detweiler. “I found a mistake when I went to buy a car a few years ago, and if I hadn’t straightened it out, it would have cost me a lot of money.”

You can use AnnualCreditReport.com, set up by the federal government, or free credit sites like CreditKarma.com or Credit.com.

Shop around first
Don’t make the mistake of walking into a dealership without first checking out auto loans from other financers, including local financial institutions. You can even get preapproved for a loan, so you know what your best possible rate is going in.

“A lot of people just assume they’re getting the best rate and terms from the dealer, and that’s the last assumption you should make,” says Liz Weston, author of the book “Deal with Your Debt.” Shopping around for an interest rate can also protect you from hidden dealership fees.

“Dealers are legally allowed to add to your interest rate in order to compensate themselves … in effect, hiding the size of their profit from the buyer. The only way you’re going to know if you’re getting the best rate out there is if you’ve gotten quotes from other lenders,” reports a June 2012 article in Time magazine by writer and editor Martha C. White. The Time article also warns consumers about dealers who offer to pay off the loan on your trade-in vehicle. In some cases, the dealership will pay it off but then add and hide the loan cost in your new loan.

Choose the shortest loan term you can afford
Those 60- and 72-month loans may look great in the dealership with their low monthly payments, but you’ll end up paying more in the long run with extended months of interest.

“Try to limit your car loan to about 48 months. That’s the optimal amount of time you should pay for your car,” says Automotive Content Specialist Mike Quincy with Consumer Reports Autos.

Make a down payment
Don’t be fooled by the signs and flyers at your local dealership promising low monthly payments with zero dollars down; very few people end up qualifying for these deals. If you can afford to, make a down payment on your purchase to save money in the long run.

“Having a down payment will help you qualify for a loan and may help you obtain a lower interest rate. Lenders tend to look favorably upon borrowers prepared to make a down payment because it makes default on the loan less likely,” reports Experian, global leader in consumer and business credit reporting, in its FAQ section.

Buy add-ons separately
Would your car look cooler with a nice set of chrome rims or a leather interior instead of fabric? Most likely, but adding these upgrades to your auto loan will only increase your monthly payments and possibly your interest rate.

“About 50 percent of a dealer’s profits come from the finance office,” says Chris Kukla, senior counsel for government affairs at the Center for Responsible Lending, in a June 2012 article for Time. As a result, car salespeople will upsell their add-on services because they’re looking to increase their profit, not help you with your costs.

Purchasing add-ons after your loan is finalized will also allow you to better evaluate the need versus cost for each, helping you save money and purchase only those services that fit within your budget.

If you have additional questions on how to get the best auto loan, contact us and one of our representatives will be happy to help.

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