How to pay less in taxes!

Tax season. A time when filers scramble around to collect various tax documents, like Form W2, 1099s, and any tax- deductible receipts they can get their hands on.

While it may be a bit too late to make many tax saving changes now, there is still one trick you may be able to pull out of the hat...a deductible contribution to a Traditional IRA. Most think the contribution must be made before they hit the send button on their return. That is not the case-

You can actually use your refund as your contribution. Just make sure to have the funds deposited into a qualified account by the filing deadline (April 18th for 2022).

A bit confused still. Let's break it down...

Should I pay off my mortgage loan if I have it in the bank?

“I have $93,000 left on my mortgage and I just hit $93,000 that was saved in my bank account. Should I pay off my mortgage?”

We receive financial questions all of the time. I thought it may be helpful to others to share some of the more common ones we see-

There are a lot of armchair financial advisors out there willing to tell you what their second cousin’s neighbor’s best friend’s dog groomer did ten-years ago that worked great for them. You truly have no way of knowing whether it was a financial strategy that worked, whether it was sheer luck, or whether or not it will work now.

Heck, scrolling through Facebook while standing in line at the grocery store I get at least three good eye rolls in from completely ludicrous suggestions and recommendations. (BTW, when talking about big money issues, ask someone that’s the real thing, like with credentials and all- We have a lot of credentials-)

Without having more information, there’s really no way to answer this question with any certainty. Sure, you can run the numbers and figure out the dollar amount you may save by paying the loan off early, but there are other things to consider.

Is this $93k ALL you have saved? Do you have anything stashed away for emergencies? What will you do if your AC unit, dishwasher, stove, microwave, washer, and dryer go out…all at the same time? What if it all of these items go out at the same time you need new tires or a new engine for your vehicle? The odds are astronomically high these will all happen at the same time, but is still possible. These are all things to consider.

What is your mortgage interest rate, and how aggressive of an investor are you? Is your “risk tolerance” based on more than just your gut or intuition? Will the bank account make you more or less than the interest rate of the mortgage? Could you make more if you placed this money into an investment account? Will your stomach allow you to place the money into an investment account? 

What are your intentions with the house? Do you plan on selling it soon or living in it until you die? Why do you want to pay the pay off the mortgage? Is this an emotional decision? Is this a personal goal you have set for yourself? Or is it simply for bragging rights towards your buddies? By the way, these are all really valid reasons.

There are many things to consider when deciding to make a big financial move, and all things being considered are just as important as the next. However, if you want a general rule of thumb (or in this case multiple thumbs), I would likely recommend if your mortgage interest rate is less than 4.5%, then investing the funds and allowing them to grow, while making the payment directly from the investment account may be your best bet in the long run. An advisor can come up with strategies to “ladder’ the money into various investment vehicles, not only making sure the payment needed for the next 12-months is available but also gaining some growth on the assets not needed for a bit longer.

However, if you have a low-risk tolerance and investing is not your cup of tea, the odds of your bank (checking or savings) earning you more than the interest rate you're paying is rather slim, so paying off the note will likely work in your favor. Just cross your fingers and hope your appliances remain in good shape for a while longer.

In any case, I suggest talking with a financial advisor. The few hundred dollars it costs to run an analysis may save you thousands in the long run-

Your Home Sweet Home (Repair) Fund

We all know (or should) that an emergency fund is a vital part of any savings plan. Having three to six months worth of non-discretionary monthly expenses to continue paying the mortgage, vehicle payments, and other bills can be such a blessing in the event of a financial catastrophe. However, that isn’t all you should be saving when it comes to protecting the roof over your head.

A housing maintenance fund should also be established to help cover those inevitable expense that creep up. Here’s why…

Saving Money On College Expenses

Whether you are at the beginning of your scholastic journey, or a new parent planning for the future, having an educational savings plan in place is vital to your budget.

What are the costs?

According to College Date, the average price tag for tuition and fees for the 2016-2017 school year runs $33,480 at a private college, $9,650 for state residents to attend a public college, and $24,930 for out-of-state residents to attend public universities. This amount doesn’t cover the costs for books, housing, transportation and meals, which can eat away at you college savings account rather quickly.

Budgeting Blunders 2

What are some of the biggest mistakes people make when trying to trim their budgets?

Where do I start…

One of the largest mistakes people make, by far, is creating a budget that is too complex.  In an attempt to allocate each penny, which is a good thing, they create a budget that has forty five or more line items, which is not a good thing.

The Hamburger Loan Shark

I have been in the finance industry, in some fashion, for the majority of my life. However, my passion for playing with money began at a much younger age.

Growing up, my sister and I spent a lot of time at my grandparent’s house. We loved going there for a weekend sleepover, or even better, for weeks at a time throughout the summer. During our visits we were pampered, as grandchildren typically are, but my grandpa (“Papa”) also used the time to teach us some valuable lessons...how to get the best bang for your buck when shopping.

The Baby Boomer Boomeranger: Adult Children Returning Home

Jeopardizing Your Retirement By Financially Helping Adult Children

As parents, we want to give our children more than what we were given growing up. Whether it’s the latest technology, the newest clothing trends, or the most memorable vacations. That’s human nature, and there’s nothing wrong with that. But at what point is it time to cut the financial umbilical cord?

The Boomeranger

One-third of baby boomers are still helping their adult kids in their 20’s and 30’s financially. Actually it appears many of these baby boomers gave birth to boomerangers…adult children returning home to live with their parents. Not only are these parents stuck covering the cost of a roof overhead, but at times also a cell phone, car payment, car insurance, and health insurance.

At what cost do these extra expenses have on the parents? More often than not, a hit to their retirement savings. Whether it’s less being put back, or funds being borrowed or disbursed, not as much is getting holed away.

Which Debt Should You Pay Off First?

When it comes to the best techniques and ideas for paying off debt, there are about as many out there as there are chocolate chip cookie recipes. And while it may take a few recipes until you find the tastiest one, finding the best fit for you when it comes to debt payoff may also take a few tries.

When you break it down, there are really three basic ways to pay off debt:

Getting Schooled On Student Loans

A few days before leaving on my trip to Germany, we received a call at the office from a local news station wanting to do an interview regarding student loans. Since Gary was out of town, and I'm a Certified Credit Counselor, I thought it only right to step up to the plate and help out.

Prior to the interview, I asked what the interviewer might want to know in case any specific details would be needed. One of the questions was fairly simple: Why are graduates having to live paycheck to paycheck upon finishing school?

The question sounds simple enough, right? The answer, however, is a bit more complicated. 

How much can you afford

I used the example of purchasing a vehicle. Before shopping around, someone has (or should) a pretty good idea of the monthly payment they can afford. Secondly, there are many financial calculators online that allow you to plug in that monthly payment amount, interest rate, and term to discover what purchase amount will fit into your budget.

So once you have the amount of car you can afford in mind, you can begin the car shopping experience. If your budget is in the $18,000 range, obviously you wouldn't want to begin that journey at the Mercedes dealership, but something a little more conservative.