When do you "turn-on" your financial brain?

There are times when we just reach into our wallet or purse, pull out the cash and pay for the item(s) we want and then there are times when as we are getting ready to purchase, we stop and think and think and think before laying down the cash.

That "thinking" is what I call "turning-on my financial brain". At what dollar amount do I start having thoughts about buying or not buying?

Here's the process that I go through most of the time and to set this up, you need to know that In my biweekly budget, I get $20 of blow cash every two weeks. (Don't laugh at the amount.)

1. How much of my blow cash do I have left in my wallet right now?
2. Is there anything coming up that I know about between this purchase and my next blow cash installment?
3. Am I wanting to buy this item because I perceive this as a good deal or is it something I really want? A good example of this for me is the Power Bars at Big Lots. Most of the time I'm thinking to myself "This is a great deal. I better pick some up before they are all gone." I've got lots of Power Bars at home already.
4. What would I or could I do with the cash if I don't buy that item?

After going through that thought process, sometimes I buy and sometimes I don't. Sometimes I even feel guilty over my decision. (I wish I could get over that feeling. That's another blog post topic.)

Anyway, that's kind of my story. As your thinking about this, share your thoughts with me. When does your financial brain turn on?

Searching for a good CD rate. . .

I just had a CD come due. It was a 6 month CD paying 3.25%. It was good while it lasted. Now a 6 month CD at that same bank is paying a whopping 0.25%. I said thanks but no thanks.

So, wheres a good place to find CD rates? BankRate.com. I've talked about this web site many time in the past and it's worth you visiting the site from time to time.

In doing my CD search, BankRate is giving me 7 banks paying from 2% up to 2.25%. This is a much higher rate than the 0.25% I'm currently being offered.

So it looks like I'm going to open up an CD online at GMAC Bank paying 2.25% APY.

What's your highest interest earning rate right now and what bank is it with?

Create Bank Activity Alerts. It could save your @$$

Yesterday I received a text message on my phone at and an email about 2pm. It said my debit card transaction exceeded my alert limit of $30. I was thinking to myself this was strange as I've been at work all day and didn't use my debit card today.

I immediately logged into my online bank account and saw pending charges in the amount of $87.98 for The Collagen Store & $15.97 for NetFlix. I immediately though, Oh no, somehow my debit card number has been compromised.

What did I do next?

1. Didn't panic and called my bank to let them know I had unauthorized debit card transactions on my account. They closed my debit card and issued me another one. (It came in two days.)

2. I called NetFlix and they were very understanding and closed the newly opened account. (The one I didn't open.)From how the customer rep handled my call, I'm guessing this wasn't the first time they have seen something like this.

3. I did a Google search for "The Collagen Store" with no results. My bank did refund the money back to me and sent me an affidavit to sign.

The moral of the story. With text and email bank notification alerts on my checking account, I know within seconds where there is activity on my debit card.

Not having setup this notification system, I wouldn't have seen these charges until I reconciled my monthly bank statement. In the mean time, there would have been a total of $103.95 not in my checking account that I though was there. Can you say bounced checks? (Not good)

Financial Planning for the rest of us

Financial planning has always been important. In today's economy, it's more important than ever.

Now I know what you are already thinking. Your thinking 1 of three things.

1. Todd, I agree with you but a financial planner is so expensive.
2. Todd, I've tried those financial planners and all they want to do is sell me the products they represent.
3. Todd, I've got a some savings and retirement but what can a financial planner really do for me? Don't you have to have lots of money before I need something like this?

I'm happy to say, I've finally come across a financial planning solution that's worth checking out. It's called eFinPLAN. I've logged in, answered a list of detailed questions and was amazed by the 60+ financial plan that I received.

eFinPLAN the Only Web-Based Consumer Oriented Financial Planning Software makes financial planning easy, affordable, and understandable.

What exactly is PMI?

Over the weekend, I received a lot of question regarding PMI insurance. What exactly is PMI and why do people have to pay it?

When you purchase a home, if your down payment on a home is less than 20 percent of the appraised value or sale price, you must obtain private mortgage insurance, known as PMI, with your lender.

The amount of your PMI is about one-half of 1 percent of the loan, according to the Mortgage Bankers Association of America. Mortgage insurance premiums are not tax deductible. PMI is added to your monthly mortgage payment.

So, now that you know the "why" and the "amount", what is it? It's foreclosure insurance that your lender makes you, the borrower pay. (ouch) You just purchase a new home and the lender is making you pay insurance so they recover there loan if you can't pay.

Here's a tip that will save you some money. Keep track of your payments on the principal of the mortgage. When you reach the point where the loan-to-value ratio hits 80 percent, notify the lender that it is time to discontinue the PMI premiums. The Homeowners Protection Act of 1998, which took effect in 1999, requires lenders to tell the buyer at closing how many years and months it will take for them to reach that 80 percent level and cancel PMI. Lenders must automatically cancel PMI when the balance hits 78 percent.

Is it time to refinance?

All over this mornings headlines in the news is that mortgage rates drop to a record low. The current national average for a 30 year fixed rate is now down to 5.13%. This rate was 6.12% one year ago. The 15 year fixed is down to 4.73% This according to Bankrate.com.

So the question is, should you refinance your mortgage? Must be as refinancing activity is up 3.7%

Here's some food for thought.

1. If you can lower your rate by 1% or more and you plan on staying in your home for more than 5 years, then refinance.
2. If you can go from your 30 year mortgage and refinance down to a 15 year mortgage and your monthly payments say about the same, then refinance.
3. I wouldn't refinance to take equity / cash out of your home. Bad idea.

If you are considering refinancing, first talk with your current mortgage company. Doing so could save some closing costs. Second, talk with your local small town bank. It's a big plus having your mortgage local.

Save Now and earn an extra 3.25% on your savings

The state of Ohio has finally passed a savings incentive bill that been in the works for a number of years now.

The short version is this. When you take a qualified financial class, you become eligible for Ohio's Save Now savings rate at a participating bank. This savings rate is 3.25% above the banks normal interest rate. PNC bank, coming to Ohio soon in taking over National City Bank, is the first bank to participate in this program.

All the details are not out yet as the State has just passed this legislation. I'll post updates as I'm made aware of them. I'll be participating in this and will do everything in my power to make sure Financial Peace University qualifies for this program.

20 Free financial courses from various universities

How would you like to learn more about personal finance issues and economics?

Over at Generation X finance, they have complied a list of 20 fantastic finance courses offered by the likes of Yale, UC Irvine, Rutgers, and many others on such topics as;

1. Family Finance
2. Personal Finance
3. Borrowing
4. Investments
5. retirement
6. and 15 similar courses.

So, hop on over to Generation X finance and learn something new about finances for FREE.

Ideas to survive this financial meltdown

What are some things you can do, can think about, should do during this financial meltdown? Here's what I'm doing.

1. Praying. Thanking God for what I have and that he is in control. This economy has not taken him by surprise.
2. Think long term with your goals and investing. It wasn't that long ago the the market / your retirement plan was doing great. This economy will turn around. You have to maintain perspective.
   
3. It is critical to spend less than you make.
4. Buildup then maintain an emergency fund. I'm not as comfortable with my current balance in this account as I was a year ago. It's time to increase this fund.
5. Sell some things in your home that you no longer use. Last week, I sold my 12 gauge.

What things would you add to the list?

Car fund down to $0

I have one savings account with multiple categories. I use emigrantdirect.com. Why, because they consistently have one of the highest interest rates out there. Emigrant is currently paying a whopping 2%. (Just kidding on the whopping part.)

With my one savings account, I have a spreadsheet where I "breakdown" the total amount into different categories.

1. Emergency Fund
2. Christmas (it's in December each year)
3. Vacation
4. Car replacement & repair
5. Vet bills (new category)
6. Appliance / Carpet fund
7. Planned giving

This week category #4 (Car) went to zero. 4 new tires on the van $470 and getting the check engine light to go off in my son's car $250.

Unfortunately, I always get bummed when I take funds out of savings. I guess it's because it takes so long to get the balances to grow. Then I soon realize, it's not my money anyway. It's the money God has entrusted to me to provide for my family and I soon become humble and very thankful that the money is there to just fix the car. No credit card bill, no big drama, just pay the bill and start building up the category again.

When it comes to category #4, I keep reminding myself, I've got no car payment and that in itself is a wonderful blessing.

Life Insurance. . .

As of late, I've been getting lots of questions about life insurance. First things first. It's really death insurance. An insurance company is paying your loved ones upon your death not your life. I guess its a better marking tool to call it life insurance.

Anyway, the best rule of thumb is to purchase a 20 or 30 year level term life insurance policy and stay away from "permanent" (whole life or universal life) life insurance. The somewhat short answer is this. You should have 8 to 10 times your annual income in life insurance up until your kids are grown and your house is paid for. At that time, you can lower or in most cases, eliminate your life insurance.

The biggest problem I have with permanent life insurance is most people with kids and a mortgage can't afford the premiums to get the 8 to 10 times their earnings in coverage. (There are other reasons to stay away but that should be enough incentive.)

So, where are some good places to shop / search for term life insurance?

1. Zander as recommended by Dave Ramsey
2. Insure.com
3. Select Quote
4. Matrix Direct
   

So, take your pick and get a free quote.

So what does Obama's "Stimulas" package mean for me?

In a nutshell, the typical American 2 working household will get a tax rebate of $800. (Assuming your combined income is less than $150,000). $400 for singles with income less than $75,000

How do you exactly get the $800? Well that depends. You can collect the credit either by having the amount show up in your paychecks, or by claiming it as a lump sum on the 2009 tax return that you'll file in 2010.

Being on the employer side of this, I'm not exactly sure how you can get the money in each paycheck. What I'm reading is that the IRS is going to make changes to the tax withholding tables used to calculate federal withholding from your paycheck. If this happens, it would most likely be June before you'd see a change in your paycheck. Don't get to excited, you're looking at about $13 a week through the end of the year.

The really sick thing about all of this is that the federal government is borrowing money to do this and it will take 30 years to pay off this debt. I don't like this one bit.

Emergency Fundy part 2

I received a couple of great comments from my resent "What constitutes use of your emergency fund?" I wanted to address both Christy & Reliantk008's comments in this post.

First to Christy's comment. She suggested setting aside "planned" savings for pet expenses. This would be a fantastic savings goal. Pet's are a loved part of the family and medical care for them can be expensive and unpredictable in their timing. Great suggestion Christy.

RelinatK008 asked how much of an emergency fund a single person should have? He also added a twist as he's a full-time college student. For a starting emergency fund $1,000 is great. $500 if your income is less than $20,000 a year. I'm guessing as a college student his income is less than $20k. A fully funded emergency fund should be no less than three months of living expenses. So, Reliantk008, if I were in your shoes today, I'd like to have between $500 - $1,000 until I graduate from college.

Thanks guys for the great comments and being the inspiration for this post.

What constitutes use of your emergency fund?

You do have an emergency fund don't you? (No a credit card is not an emergency fund.) Assuming you do have an emergency fund, what constitutes using this fund?

I've experienced some unplanned financial expenses here of late. Today, my son's car is in the shop getting a once over. Earlier this week, I took one of our two dogs to the vet and the cost was just over $350. (Ouch)

Are either of these two things emergencies?

The car repair. . . NO.

The vet. . . Yes.

Here's why. First, I save money on a regular basis for car repairs. Cars will breakdown from time to time or need routine maintenance. (I'm pulling funds out of my car repair savings for this.) My dog needing surgery was an unplanned and unforeseen large expense. (i.e. an emergency.)

So, I use my emergency fund for unplanned unforeseen large (over $100 for me) expenses. Once I use emergency fund dollars priority #1 for me is to replace those dollars ASAP to get the fund back to "normal".

$8 a week

I can boil down the soon to be signed economic stimulus bill into two points.

1. You'll see about $8 more per week in your paycheck
2. It will take over 30 years to pay for this "stimulus"

If you ask me, borrowing money is what gets people / governments into financial trouble in the first place. I'm glad our government is trying something to help the economy. I'm not sure giving every working person $8 more dollars a week will do that.

Thoughts?

Income Tax Refund?

If you are like most, you'll be getting a tax refund this year. Mine is coming Feb 13th via direct deposit.

The real question here is what are you planning on doing with your refund? I've got some advise / opinion to share with you on this.

1. The most important thing you can do is write down on paper what you'll do once the refund hits your hands. If you don't write it down, you'll spend it 3 or 4 times over in your head. Heaven forbid you "spend it" before you even have it. 70-80% of people do this.
2. Put it back for an emergency. I know this is not the "fun" thing to do but, if you do not have a fully funded emergency fund, this is the smartest thing to do.
3. Pay down some debt. Knock out a bill or two. What a blessing to have less bills to pay.
4. Bless someone who's out of work. Take a portion of your refund dollars and give it to someone in need. Way cool!
5. If your consumer debt free, use your refund to "fund" your next family vacation. This one is our plan.

My final suggestion, especially if you have a large refund ($1,000 or more) fill out a new W-4 at work and pick MORE dependents than you have on your current W-4. By doing this, less will be taken our of each paycheck, giving you more money in your pocket now. Who wouldn't want more money now?

Working on your taxes yet? Direct deposit

I started working on my taxes this weekend. (Along with taxes for by brother and a few friends.) When you're taxes are completed and you've check, double checked and checked one more time before you file them, you'll have one of two outcomes.

1. You owe the IRS
2. You are getting a refund

First, if you owe, don't panic, Start saving now and don't file your taxes until April 15. This will give you about 2 1/2 months to save for what you owe. (Use this same principal if you owe your state and or city) Even if you can't pay 100% of what you owe, please file your return. This will keep you for going to jail.

If your getting a refund, did you know you can have your refund direct deposited into as many as 3 different accounts? I think this is way cool. You could have a few buck deposited into your checking account, a few more into your savings account and even some into your IRA. All you have to do is include form 8888 as part of your tax return and the IRS will do the rest.

By the way, how big is your refund? I blog about why a large refund is a bad idea later on. Stay tuned.

I'm excited about. . .

Yes, I know today's the day we get a new president. That's cool and all but that's not what has me excited.

What I'm excited about is Financial Peace University starts tonight and we'll have over 50 people taking this round of classes. Why am I so excited? Because I know, life change happens in and through our FPU program here at NewPointe.

I have no doubt that people will begin to free themselves from the bondage of payments and debt. Can you sense the joy in me? I hope so.

I encourage you to take steps today to get in control of your finances and not let them control you.

One more reason I love Kiplinger's magazine. $100

I love personal finance. One of the resources I look forward to reading each month is Kiplinger's magazine. It's got some great down to earth financial advise, month in and month out.

A few months back, I took the magazine up on an offer and agreed to take part in their monthly online survey. The ask questions about the magazine. I'm sure there's a great marketing angle in the survey but I don't mind. The survey doesn't take very long and they always "goat' you into taking it by saying, "You'll be entered into a drawing for a $100 Amazon gift card."

Well, I'm here to tell you, the do give away those $100 Amazon gift cards. Today in my mailbox was a letter from Kiplingers. The first thing that came to my mind is "Why are they sending me something in an envelope. Where's the next issue?" To my great surprise, I opened up the envelope to a Congratulations card with a $100 Amazon gift card. Way cool!

See, It pays to read up on your personal finances. Off to Amazon.com

New Tax Deduction related to Real Estate Taxes

Up to this point, you had to have itemized, Schedule A on your 1040 tax return in order to be able to deduct Real Estate Taxes. The IRS has made a rule change that lets those who do not itemize deduct R/E taxes for 2008 and 2009

Real Estate Tax Deduction — There is an additional standard deduction for those who don’t itemize their deductions, but pay real estate taxes. The additional deduction amount is equal to the amount of real estate taxes paid up to $500 for single filers or up to $1,000 for joint filers. This deduction is available for the 2008 and 2009 tax years and increases your standard deduction.

Although most people who own a home pay more than $1,000 in R/E taxes, a $1,000 deduction is better than the zero you got last year. So don't miss this when doing your taxes this year.