Cut These Costs TODAY

Man buying groceriesHave you ever unexpectedly found out you’re quickly going to have less income? It’s enough to throw you into a panic. But the best way to get through hard times is to take a few deep breaths and put a plan together. Check out these common targets for quick and effective expense cuts.

Food
You might find it obvious that evenings dining out at fancy restaurants probably aren’t the best idea when experiencing a budget crunch. But think about your groceries too. Consider avoiding the higher-priced stores and stocking up on the basics at the more reasonably priced spots. You might find that cooking at home and taking your lunch to work saves you lots of money and ends up being healthier too.

Cable/Movies/Rentals
If you’re like most people, your visual entertainment comes from multiple sources. You may watch movies on cable, in the theater, via rental or online. In crisis situations, it’s best to focus on watching movies at home and using one particular way to do it. In other words, if you have both Netflix and premium movie channels, it’s probably time to go with one or the other.

Phone plans
It’s nice to use a smart phone to be able to look up information on the go, but you could probably make do without the data plan if you had to. Did you know that you could also be on a prepaid smart phone plan? Call your service provider to ask them to perform an analysis on which plan is best for you. You might be paying for more than you actually need. Also consider eliminating your house phone if you have one.

Gym
It’s important to get some stress-relieving exercise during this trying time, but there’s no reason why you should have to spend money to do it. Brainstorm ways to be active without having to fork over a big chunk of your paycheck. The main thing is to just get moving!

Shopping as entertainment
One activity that could put you in the trouble zone is shopping for fun or to ease tension. “I won’t buy anything, I’ll just browse” too often can lead you down the path of unnecessary spending. Eliminate leisure shopping or other activities that put you in temptation.

Gas
Is it an option to work from home more? Can you carpool or combine your errands into fewer trips? If your family has multiple vehicles, can you sell one and share the remaining?

Insurance
With the ease of using the Internet to compare rates, the insurance business is much more competitive than it used to be. Shop around for the best deals on any type of insurance you have—auto, home, life, etc. Check into bundling these with one company to save even more. How is your credit score? This might affect the cost of certain insurances. Also be sure to ask about discounts you might apply for, and the option of raising your deductible in exchange for a lower monthly payment.

Utilities
Think of ways to stay warm or cool more efficiently. Put on more layers in the colder months and spend more time outside during the warmer times. Be conscious of turning everything off and even unplugging electrical items when you leave a room.

Habitual items
When you have a comfortable financial situation, it’s easy to buy coffee, cigarettes, alcohol and convenience store snacks without thinking too much about it. But in these tighter times, think about what you are really getting out of these purchases and if there are expenses that are more important.

Taxes
If you have more money taken out of each of your paychecks than is necessary in order to get a large income tax refund check in the spring, you are over-paying the government each month. Cut this expense by using the IRS withholding calculator to determine the appropriate amount to have withheld from each paycheck.

None of these cost-cutting measures alone is guaranteed to immediately solve all cash flow issues, but in concert they can potentially save you hundreds of dollars per month.

Used with Permission. Published by BALANCE Includes copyrighted material of BALANCE.

Useful Apps for Managing Your Expenses

Using your smartphone to be smarter about budgeting
Creating and sticking to a budget is essential if you want to get out of debt and achieve financial security, but it’s easier said than done. The proper amount of money to spend on various expenses can be difficult to calculate, and summoning the willpower required to stay true to those set amounts can prove even harder. Fortunately, there are many apps designed to keep you honest—and in the black. Here are some of the best apps available for managing your finances.

Mint
The most popular app for managing your money is Mint, a free app from Intuit, the company behind TurboTax and QuickBooks. Mint allows users to connect all of their bank and credit card accounts, as well as their monthly bill statements, into one convenient, all-in-one application for managing spending. Bill payment reminders, specific advice based on your unique spending habits and free credit scores are among the other services that Mint has to offer.

YNAB
You Need a Budget, or YNAB for short, doesn’t just document your spending—it seeks to actively improve your purchasing habits and behaviors. For $5 a month or $50 per year, this app is best for those struggling to escape from the burden of debt. In addition to designing a budget that will help you achieve solvency, YNAB also provides helpful advice and community support in the form of an online forum made up of others suffering from the constraints of living paycheck to paycheck.

Level Money
Many consumers get into the bad habit of checking their bank account, seeing a healthy balance and then spending with carefree abandon. But there’s a difference between how much you can spend and how much you should spend, and Level Money is designed to illustrate that divide. This free app factors in essential monthly costs like rent, utilities and grocery bills to show the “spendable” amount of money in your bank account. You can also program it to take into account your saving goals, which helps you better prepare for the future.

Digit
When managing your expenses, it can be hard to remember to save money; fortunately, Digit does it for you. This free app makes an analysis of your spending and income and then automatically takes small amounts from your checking account, often anywhere from $5 to $50, and banks them in an account managed by the company. The app is fee-free and comes with a no-overdraft guarantee, so there is little risk involved. No interest is earned on your savings, since Digit is not a bank, but there is a “Savings Bonus” of five cents for every $100 saved over a three-month period.

Whether you are racked by debt and searching for a way out or simply looking for a convenient way to keep track of expenses and improve your saving habits, there are many free and affordable apps that can have a positive impact on your finances.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

Mobile Wallets: Moving Shopping Into the Future

A more secure and convenient way to make payments
These days, most transactions don’t involve physical money, so why should they involve physical wallets? Thanks to new technologies like Samsung Pay, Android Pay (formerly Google Wallet) and Apple Pay, you can now use your smartphone to securely make transactions without ever having to take out your credit card.

According to the latest survey data from market research firm CMB, only about 15 percent of smartphone users actually utilize these technologies to pay for purchases, but usage nearly doubled from 2013 to 2015 and will likely continue to rise over the next few years as the benefits of mobile wallets are better understood.

If you are not sold on the idea of joining the new trend, here’s why you may want to reconsider:

Ease of use
A mobile wallet is an app that can be installed on a smartphone, or may even come pre-installed. Investopedia explains how they work: “Once the app is installed and the user inputs his payment information, the wallet stores this information by linking a personal identification format like a number or key, QR code or an image of the owner to each card that is stored.”

You may also have to contact your financial institution to allow the mobile wallet app to use the payment card. Once everything is set up, the mobile app uses a radio-based technology called Near-Field Communication (NFC) that communicates with the merchant’s point-of-service terminal. In other words, you only need to wave or hold your device over a store’s reader to make a payment.

Security
Because mobile wallets use encrypted payment codes and never actually transmit your account number, they are much safer to use than credit cards. In addition, paying with a mobile wallet requires your fingerprint or personal identification number, so even if a thief managed to get their hands on your smartphone, they would have a much harder time spending your money than if they had stolen your credit card.

“Even if a thief bypassed all the security, the risk to you is low,” Jeff Blyskal writes in an October 2016 article for Consumer Reports. “Mobile wallets usually require an underlying credit or debit card to fund transactions, and those cards limit your liability for erroneous or fraudulent charges to little or nothing.”

Convenience and incentives
Mobile wallets can be used for more than just emulating credit and debit cards. “In addition to payment cards, the mobile wallet can also be used as a storage device for driver’s license, Social Security Number, health information cards, loyalty cards, hotel key cards and bus or train tickets,” Investopedia explains.

Thanks to mobile wallets, you can carry hundreds of rewards cards virtually, making it easier to keep track of the ones you own and to remember to use them. You can even use mobile wallets to make online payments, removing the need to tediously enter dozens of digits for each transaction.

You can also save money with various reward programs. For example, Android Pay offers rewards for using the app at selected partners, while Samsung Pay offers a tiered rewards system based on how many monthly purchases you make with it.

Widespread adoption
So far, the main obstacles faced by mobile wallets are the different payment methods. While almost all modern smartphones will support Samsung Pay, Android Pay, Apple Pay or a combination of these, all three of these apps may not necessarily work at all retailers.

“Samsung Pay can be used at more than 10 million U.S. stores, Apple Pay at more than 3 million stores, and Android Pay at more than 1 million stores,” Blyskal says. “The numbers will grow as retailers upgrade their payment card readers.”

Being able to use Samsung Pay at more than 10 million stores easily makes it the most attractive of all the mobile wallets, but you have to own a Samsung smartphone to use it. The upside is that it works everywhere: according to Ethan Wolff-Mann in an October 2015 article for the Time’s Money, “[Samsung Pay] works everywhere, since it can mimic a magnetic strip if NFC technology is unavailable; retailers don’t get your credit card info.”

This doesn’t mean that Samsung will continue to be the best option for smartphone owners interested in mobile wallets, as both Google and Apple are strongly invested in using this technology to sell smartphones and will continue to implement rewards for using them. Furthermore, using a mobile wallet speeds up transaction times, which gives retailers extra incentive to adopt NFC-capable card readers.

For the time being, mobile wallet adoption across retailers may still not be good enough to leave your credit card at home. In the future, however, it’s very likely you’ll never need to go out shopping with more than just your smartphone.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

How Gift Cards Can Help You Save Money

Strategies involving gift cards to save you cash

There are two main ways you can save money with gift cards: One has to do with buying them, and the other has to do with using them. Read on for more information.

Use only gift cards while shopping
Shopping with gift cards can be an extremely effective budgeting tool. Determine your monthly expenses (go beyond rent and utilities) and place them into categories such as groceries, pharmacy, household items, auto maintenance, clothing and more. Next to each, list the stores where you most frequently shop, starting or listing first your top-choice vendor. Buy a gift card and shop for your items at that store using only the gift card. It will save you from overspending on any given category.

Buy discounted gift cards
To take even better advantage of gift cards as a budgeting tool, you can buy those gift cards at a fraction of the normal cost. How? People often utilize online auction sites such as eBay to sell off cards that they know they won’t use. Peruse your options there or visit an online gift card exchange site such as CardHub, CardCash, Cardpool or GiftCards.com.

Herb Weisbaum of CNBC also recommends checking big-box, bulk retailers such as Costco to find gift cards being sold at less than face value. Additionally, don’t forget to check into your loyalty program or credit card reward points — they are also good sources for gift cards on the cheap, and some even offer them at a redeemed-point discount!

“This is a great untapped resource for savings,” said Bankrate.com’s Janna Herron in a CNBC article. “It’s an easy way to stretch your rewards and your…budget, and maybe use up points or miles that are about to expire.”

Finally, keep an eye out at the shops you frequent for any discounts or promotions they may be having — especially during the holiday season, when there is a big push to get people to come back into their stores once the holidays are wrapped.

Both buying discounted gift cards and using them to stay on budget are great ways to cut prices on purchases you are going to have to make anyway — so what are you waiting for?

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

Best Ways to Save for Your Mortgage Down Payment

Four simple methods to get the ball rolling on your down payment savings
Buying a home is ajanuaryfeatured_saveforhome huge step in life and begins with a huge hurdle: the down payment. Fortunately, by starting early and thinking things through, you can get a solid jump on saving. Here are some easy ideas to get you started.

Automate Your Savings
At your usual financial institution, open a savings account specifically designated for your down payment/mortgage. Not only will this allow you to conveniently transfer funds from one account to the other, it will also allow you to automate transfers or directly deposit part of your paycheck into the specified account.

Make a Budget
Create a spreadsheet that lists all of your monthly expenses and monthly net income. Not only will this tell you how much you can put into savings, it can also help you discern what monthly mortgage payment you can afford. If the buffer between expenses and income is already too small, this is an early red flag that you will have to start doing some things differently to afford your mortgage.

“Given that income and expenses are closely matched in many households, the only way to get ahead is to bring in more money or change your spending habits (meaning spend less) and avidly look for new savings sources,” says Peter Miller, The Simple Dollar contributor.

Invest Your Funds
If you are looking to buy a house within the year, Kathryn Vassel of CNN Money recommends keeping your money liquid; but if your plans are more long-term, it is a good opportunity to invest in order to boost savings. If you are looking at a 10-year time frame, stocks could be a good option for you, Vassel writes. If you think you’ll buy a house in five to seven years, consider investing in bonds: 50 percent in longer-term bond funds or individual bonds and 40 percent in short-term bonds that mature in one to three years, plus 10 percent in cash. Finally, try higher-interest CDs if you are still two to four years from buying a home.

Research Home-Buying Programs
One of the first steps toward saving for a mortgage is setting a goal. A general rule of thumb for the down payment is 20 percent of the home’s selling price, but many available government programs also offer lower down payments, down payment loans or grants, or housing discounts. For lower down payments, look into GSE loans or loans through the FHA, VA or USDA.

Whether you choose one of these savings methods or all of them, they will help you come up with the down payment for the home you’ve always wanted.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

The Power of Compound Interest

Why it really pays to invest early in a retirement account
Money in a savingsjanuaryfeatured_compoundinterest or retirement account grows over time as it earns interest. But the interest rate isn’t the only factor that determines how much it grows; compounding interest helps your funds grow faster because it lets you earn interest on the money you deposit plus previously earned interest.

Compounding interest gives young investors great power to save for retirement, even if they don’t currently have much to save.

People in their 20s and 30s who are working to build their careers are often tempted to put off investing in retirement for a time when they are more established financially. By doing so, however, they miss out on the big advantage they have over older, wealthier savers: time.

“If you invested $10,000 in a mutual fund and the fund earned a 7% return for the year, you’d gain $700,” according to NerdWallet. “Over the years, that money can really add up: If you kept that money in a retirement account over 30 years and earned that average 7% return, for example, your $10,000 would grow to more than $76,000.”

To test out the power of compound interest for yourself, try the Compound Interest Calculator from NerdWallet. It can show you exactly how far your money could go if you started saving today. Just plug in hypothetical savings amounts at https://www.nerdwallet.com/banking/calculator/compound-interest-calculator.

The earlier you start investing, the more time your money has to compound, and when you do the calculations, it becomes clear that saving a little bit of each paycheck today can add up to a much bigger sum at age 65 than if you wait a few decades to start saving, even if you can afford to save more each month when you’re older. The bottom line is that to truly take advantage of the power of compound interest, you need to start saving as early as possible, and the advantage you gain by doing so cannot be overstated.

Business Insider calculated how much you would need to save each month to reach $1 million by age 65 at a 6 percent return rate, and the results are astounding. If you start saving at age 20, you only need to invest $361.04 each month, while starting at age 30makes the required monthly savings nearly double to $698.41. If you wait until you are 50, you need to put away $3,421.46 each month to end up with the same amount at age 65.

You can see a chart that illustrates the calculated monthly savings required for each age group at http://www.businessinsider.com/compound-interest-monthly-investment-2014-3/#.U6xcEI1dWVh.

“When you start saving outweighs how much you save,” says Business Insider contributor Libby Kane. “Retirement accounts such as 401(k)s and Roth IRAs aren’t just savings accounts-they’re actively invested, and therefore have the potential to make the most of this benefit.”

If you’ve been inspired by the mathematical magic of compound interest, harness that motivation by talking to your financial institution about opening up a retirement account or by committing to making regular contributions to your existing savings and retirement accounts.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

Investing vs. Paying Off Debt

Deciding factors include your financial resources and goals

Some people willinvestvsdebt_featured decide to pay off all their debts before ever investing money, while others will say it’s better to carry livable debt and be able to grow your savings over time. There are pros and cons to either option, depending on your financial situation.

What to consider first
According to an October 2014 article in U.S. News Money by contributor Joanne Cleaver, paying off debt first means losing potential compound interest earned on any investments you would have made during that time. On the other hand, investing first means having to manage your debt and pay more in interest over time. And if you’ve invested your money, you likely have fewer funds to make payments toward your debt.

Cleaver says that understanding your financial situation and what you can handle is the largest determinant. She suggests you find your tipping point for affordability by looking at the interest rates of your loans and calculating how much it will cost you on a monthly basis to maintain the debt. If the number doesn’t fall within your affordability parameters, consider paying off the debt before doing any investing.

To do this, Paul Heising, a financial adviser with California-based investment firm Smarter Decisions, recommends “[organizing] consumer debt accounts according to their interest rates so you can see which are costing you the most,” and to “pay back loans with the higher interest rates first, especially if those rates are over 10 percent annually.”

Advantages of doing both
Other experts recommend striking a balance of paying off your debt and investing, but only with certain, less-risky investments at first. Joshua Kennon, author of Investing for Beginners, suggested such a balance in a January 2016 article on the financial resource website TheBalance.com.

According to Kennon, you should fund any workplace retirement accounts, like a 401(k), and start an emergency fund using an FDIC-insured institution while paying down any high-interest rate loans, like student loans and credit cards. Then, he advises to circle back to investing more money into such savings vehicles as an IRA or Roth IRA, and begin building assets in mutual fund and brokerage accounts.

He listed three main points in his reasoning:

  1. “You minimize your tax bill, both from earned income and on investment income, which means more money in your own pocket.”
  2. “You create significant bankruptcy protection for your retirement assets. Your employer-sponsored retirement plan, such as 401(k), has unlimited bankruptcy protection under the current rules, while your Roth IRA has $1,245,475 in bankruptcy protection as of 2015.”
  3. Reducing debt over time allows you to build up while you pay down, so that when you are debt-free you suddenly have a major stream of cash to do with what you want.

An article by CFP Nick Holeman for investment management firm Betterment suggested a similar plan to pay off debt while investing in certain funds.

Holeman advised making at least the minimum payment on your bills, on time, while taking advantage of any employer retirement savings as you pay off major debt. Then you can build your emergency fund and finally invest further for retirement and savings.

Contributing to your company 401(k), even with debt, is important, said Holeman. Especially if your employer has a match contribution, making your contribution maximum to earn the match can yield a higher return on your investment than can many other investment alternatives.

“If you have debt that’s costing you over five percent in fees, pay it off as fast as you can. Start with the highest-interest debt first,” Holeman suggested.

In the end, the decision between off all your debts first, investing all your money first or balancing a plan of both depends on your financial risk-taking and resources.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.