11 Powerful Ways to Save Money on Utilities, and Use it for Your Budget
You can save on utility bills and then use the money for your budget. I have a lot of experience with utility bills. The many homes I have owned give me experience in utility choices, use, and maintenance. After living in areas with high utility bills and areas with lower utility bills, I can safely say I have utility experience.
The areas with low utility bills have a way of sneaking high cost in if you do not pay attention. Understanding utility use and care is a large part of maintaining a home.
11 Great Ways to Save Money on Utility Bills And Find Money for Your Budget:
1. Lights –use energy efficient light bulbs and automatic on/off switches to conserve energy
When you use overuse lights it makes a big difference in your bill. In some places electric bills are awfully expensive where there is a utility monopoly. Too many families or even singles do not keep what I call, “light awareness”. If you leave a room, turn out the lights, it is that simple.
If you want to use lights for security purposes, use automatic on/off switches. You can pick up one from your local hardware store, there are many examples. These are useful when you go out of town and do not want others to know that no one is home. Just make sure you keep the light use to a minimum.
Energy efficient light bulbs shave considerable money off your bill. Some energy efficient bulbs you will use, will seem to last forever. If you use the combination of low light use and energy efficient lights, you can see low utility bills here by far.
Children are another reason lights are kept on too long. It is OK to explain to your kids, no matter what their age without putting pressure on their little minds. Some kids even feel important when they are asked to help and why.
2. Gas–Keep gas for cooking and fireplaces to minimum to knock a dent in your bill.
Many of you love cooking with gas, so there is a lot of gas being used. There are also gas fireplaces. There are two types of gas. Natural gas usually used in the cities and LP Gas (liquid propane) usually used in rural areas.
Because I have experience with both, I can say that electricity is far cheaper than LP gas in rural areas and natural gas is less expensive than electricity in urban areas.
Because LP gas is so expensive, I never run my pilot in my country home fireplace. Of course, natural gas is cleaner to burn for the environment. To save money, it is best to build a wood burning fireplace, especially where wood is plentiful. Keep all gas appliances during off during non-use to save money on burning. Keeping gas use low, will enable a low utility bills in this area.
3. Water – Is one of the least expensive utilities, but you can save money by controlling use
If there is a leak, you water bill will explode. One way you can find if there is a leak is if your water bill is exceptionally high over past few months. Use only what you need and turn your water off when not in use. Get leaks fixed immediately.
4. Low flow water fixtures are recommended – these save on water and heat
Low flow water fixtures keep the flow to a minimum, so you do not use as much water as if you have a high flow valve. So, they save on water and if it is hot, save on hot water.
The problem is that many people do not understand how important this is and instead they remove the part that restricts the water flow in show heads and faucets. It works best with toilets.
Understanding the difference, it can make in your water and heat bill, will help to understand its importance.
5. Septic/sewer – Avoid busted pipes and improper maintenance
In rural areas or urban areas that have not been fully transformed you will have a septic system instead of city sewer system. It must be maintained with a septic enhancer or you could have an expensive backup. You also must have it cleaned out every few years or you could get into expensive trouble.
6. Landline phone vs cell service – You can now get one monthly fee for local and long distance.
With landline phones you get enhanced 911 calling, which is important for the extremely sick or elderly. This means if you live in a major area the call is traced to your location immediately. The ambulance will know where to go even if you hang up.
With cell service this is usually not the case, they can only tell the general location.
Small Savings Become Big Money Over Time, -Lois
Landlines are usually is less expensive than cell service. The issue is you will not have cell service when you are away from home if you do not own one. There are very inexpensive cell service contracts, you must talk to your chosen carrier and get an inexpensive fit for you. Cell phone contracts are competitive and constantly changing, so stay informed.
7. Heat/air — This is where the cost can be quite high.
The thermostat is king; keeping the thermostat down with heat, and up with air, can save a few thousand dollars a year. Investing in a programmable thermostat will save when you are away. The largest costs come when you must replace your system. Know what the costs are before you ask a professional to replace your system.
Also, updating to an efficient system will save money over time and pay for itself. We upgraded to a complete heat, air, and programmable thermostat modern system and it paid for itself in 3 years. Out bill was almost cut in half. Here is where you can find money for your budget in a huge way.
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8. Fireplace – A wood burning fireplace is a great alternative for heat.
You can keep the thermostat down exceptionally low and make up the heat with the fireplace. It will basically take the chill out of the air. But, you will be comfortable.
9 Open windows – In places where you get a cool breeze from windows.
Use natural breeze instead of air conditioning. Air conditioners are an extremely expensive way to cool when you have free cool air. Keeping air conditioning use to a minimum will allow you to find a maximum
10. Energy efficient window coverings help to control the atmosphere.
There are many types of window coverings that control the heat or cold at the surface of the window. Energy efficient window coverings run the gamut from shades to curtains. Check with your local window covering retailer and they will review the best options for your windows.
11. Unplug – plugged up electrical appliances use electricity and generate costs.
Many homeowners and apartment dwellers do not know this. You will see a difference in your electrical bill when you unplug all unnecessary outlets. It is also wise to unplug during major electrical outages to prevent short circuits.
Consistency is the Key to Saving Money, -Lois
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In Summary
If you do not need the lights, gas, air, or heat – keep it off, and you will lower your bill. You will save money on utilities that you can use for your budget, only when you have “utility use awareness”.
Leave home and turn off – do not keep your electricity or heat on if you leave home. There are a few exceptions. An exception would be if you live in an area that gets cold winters and your pipes would freeze if the heat is not kept on low. Remember to wrap pipes, wherever you can to prevent frozen pipes bursting during cold winters.
Use an automatic timer to turn on and off lights when you are away, or they need to be on for an extended time.
Fireplaces are great for heat if you can get the wood at low or no cost.
A septic/ sewer system requires maintenance, find out from your local septic person.
Water is not free, so use it sparingly, in some areas it is downright limited.
You can get an inexpensive landline or cell phone contract, do your research.
These are surefire ways to save money on utility bills. As you use these suggestions, you will see a deep cut in the money you spend on utilities.
You will be surprised that you will find money for your budget, you hadn’t dreamed of. Save money when maintaining a home, by understand how to efficiently use your utilities.
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Lois Center-Shabazz| Money Strategist | Course Delta Agency
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3 Best Factors to Consider In Order To Buy a Great Home
There are many reasons you should buy a home. This article applies to owner-occupied ownership when you buy a home, only. Rental real estate is quite different than owner occupied home ownership. I will walk you step-by-step through key elements of the home buying process.
The loans are more difficult to qualify for than owner occupied. Tax deductions are much treated differently. If you do not hold home investment long enough, you could be required to pay short-term capital gains taxes. These home buying tips will enable you to understand the most important elements of home buying you should know before your search.
The More You Know, The More You Grow In Useful Facts
Here Are 3 Factors to Consider Before You Purchase a Home:
1. Home prices are low or reasonably priced for your area, which makes the area affordable
Home prices fluctuate about every 7-10 years. Occasionally, due to a catastrophic event where there are a lot of foreclosures, the prices go way down. When the event is over, and people are back to work the prices usually go back up.
The prices fluctuate from low to high for several reasons. Some of the reasons are:
1) If there is a big layoff in a town, everyone is trying to sell at the same time and there are few buyers, home prices may take a nosedive.
2) A major industry has moved out of a town and there are few buyers for a home, prices will go down, 3) Interest rates have spiked up and it is hard for buyers to qualify for a mortgage and therefore prices of homes may correct down.
On the other hand, prices go up sometimes when:
1) Loans are easy to qualify for (as in the real estate crises from 2003-2008), and people got loans who should not have them, this causes many loan defaults in a short period of time.
2) A new high paying company may move into the area and there is a shortage of homes to buy, people start bidding up homes, as in some areas of the U.S. that have high employment and low inventory of homes.
3) New homes are not being built, and new companies move into the area quickly, so there is a shortage of homes.
You get the picture. Real estate does not go up constantly, as some beginner home buyers tend to think, there are sometimes corrections in a high market, and low markets go high for various reasons.
Never Rush to Buy a Home:
The point here is that you do not want to rush and buy a home in an area that you are not familiar with; the prices may be high and at the top of a market. For reasons unknown to you, prices are starting to come down.
This is important to know because, if you must sell in a short period, you may have to sell for less than you paid for the house. This is called, being under water with a mortgage, you will lose money.
Typical appreciation for a well-kept home usually runs around 3-5% per year, according to the National Association of Realtors.
Know what is going on in your area, make sure you are not buying at the top of a market, unless you know you will be in the area for a long time, otherwise, you could be stuck with a home you can’t sell for more than you paid.
You Will Have the Best House, for The Best Price Possible, if You Follow the Home Buying Process; When You Buy a Home.
2. Buy a home when you have had a steady job for a while.
It goes without saying that income is what pays the bills. Make sure that the company you work for is stable or your business is on sound footing before you buy a home with a mortgage.
Most mortgage companies will want to see 2 years of tax statements, in addition to that. They will usually also order their own copy directly from the Internal Revenue Service. If you are self-employed, agents will ask for actual bank records of your small business deposits.
During this time also make sure you have savings in place for a down payment, and escrow and closing cost. It is also a good idea to have additional savings to keep in place in case of a job layoff.
3. Buy a Home when you plan on living in the area for several years.
As I discussed in number 1, real estate goes up and down. When prices get high, many times there is a correction and prices come down for a while.
If you happen to NOT do your homework and buy in a real estate market that is about to come down, for a variety of reasons, you may find yourself upside down with your loan for a while.
This will take more years to make a profit on your loan. You will have to ride out the correction, and get back your escrow and closing cost as an initial investment. Normally it takes about 4 years just to get back your escrow and closing cost as the home value increases.
Corrections in the Real Estate Markets:
If you must ride out a correction it could take many years longer. If you happen to buy at the bottom of a real estate market, you could get lucky enough to ride up the value of your home, and you could sell much faster or a profit. It is important the house is well-kept and affordable for you.
In any case, you should study your area, study the real estate market, study the economy or the changing of the economy in the area, and know when to buy. That is; know if you are at the bottom or top of a market. Real Estate works best when it is held long term, a key factor in home buying tips.
In normal cases, it could take as long as 8-10 years to make a profit from your real estate purchase. Use this calculator to find out the home you can afford.
This will take more years to make a profit on your loan. You will have to ride out the correction, then get back your escrow and closing cost as an initial investment. Normally it takes about 4 years just to get back your escrow and closing cost as the home value increases. The home buying process tighly weaves, escrow, title, costs, mortgages and time.
In any case, you should study your area, study the real estate market, study the economy or the changing of the economy in the area. And know when to buy, that is; know if you are at the bottom or top of a market.
Use all of these great home buying tips to buy a great home, but first understand the home buying process.
Lois Center-Shabazz| Money Strategist | Course Delta Agency
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Secrets to the Timeshare Presentation
Timeshare presentations include free cheap vacations, free gifts or free meals, including champagne breakfast, but not so fast. They are not really free. Because of the high pressure sales it is essential that you do your homework before attending a timeshare presentation, and don’t buy on a whim.
The most important aspect of a time share presentation is to understand what you are NOT buying.
Understand the true meaning of a timeshare and read the contract before you sign under pressure. Most timeshare buyers buy under pressure while on vacation or walking through a mall, to get an invite to a high pressure sales presentation. I have spoken to many who have done this very thing and regretted it later.
The most common question I am asked is, “should I buy a timeshare to save money on taxes and own a wonderful place to vacation”?
I talked to a friend who did tax audits and was assigned to an 8 inch thick stack of timeshare tax foreclosures. This prompted me decided to look further into the timeshare craze. Later, even going as far as to spend a week in a timeshare condo owned by a friend, I and attended a high pressure sales presentation myself.
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The Definition of a Timeshare
The first thing you need to know is that when you purchase a time share you are purchasing the right to use a vacation room or condo typically for 1 week a year. This is if you purchase 1 unit. The quality of available condos go from type A to type D. A, of course being the nicest and best equipped.
You do not own a share of the building, you do not own a room, and you definitely don’t own the land that the condo is built on. What you buy is one unit of time or one week of time. Some people buy two weeks of time.
Typical Timeshare Cost
Understand what it means to sign a timeshare contract; you are promising to pay in full the contract price of the time share, the interest payment, and the yearly maintenance fee.
The payment is usually from 8-12 years. The yearly tax and maintenance cost is for life. A lady ask me at a conference, “why did my timeshare company send me to collections”?
I said did you understand that you were purchasing the timeshare with a loan and lifetime maintenance cost when you signed the documents? Of course, she said no.
For some strange reason most timeshare presentations don’t make it clear that the buyers have to pay maintenance for life and the maintenance goes up over time. They assume you know you are signing for a loan.
When You Don’t Pay The Time Share Loan Principle And Interest Payments
If you don’t pay the time share principle and interest payments you will be sent to collections. When the balance is not paid from collections, you will be foreclosed on. If your time share is paid off and you do not make the yearly tax and maintenance cost your time share will be sold for back taxes.
How Most Buyers Find Out About Timeshares
They go on vacation, on a honeymoon, or just stay at a resort hotel. The company who owns the hotel may also own timeshare unit building.
They will offer a free $100 bill, lunch, or dinner to coerce you into listening to a timeshare presentation, which is usually a high pressure sales presentation.
The company gets back the “free stuff” many times over when you make payments on the timeshare loan and the lifetime tax and maintenance cost. So, once again, you learn, there are “no free lunches”.
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A Motivating Factor For Buying a Timeshare
High sales tactics make some buyers think they are actually purchasing ownership in a condo unit. Some people are motivated by the false tax savings.
Because of the ease at which you can purchase a timeshare many people who buy them do not itemize for tax savings. Also, they are in too low a tax bracket to actually receive a savings from the timeshare.
For those in higher tax brackets the tax savings on a timeshare is too small to make a difference. Another reason people buy timeshares is because they enjoy the vacation swaps. This is when you can swap timeshares with others, to vacation in different locations. Some timeshare presentation vacations sales are simply fake.
When Buyers Falter On Their Time Share Payments
Judging from conversations I have had with timeshare owners many don’t understand their obligations because:
1. They signed up under pressure – did not read the contract.
2. The sign up was quick and didn’t understand what they are buying.
3. Some are young and gullible, so they sign up without the knowledge of contracts.
4. Many people don’t understand that they have to pay taxes and maintenance cost every year for life. This is necessary to use the timeshare “time” alloted to them for the year.
Concentrate on buying “actual” real estate, learn the best way
The best way to get out of your timeshare contract during or after your vacation is to realize you usually have a 3 day right of rescission on contracts. That must be in writing, preferably notarized, and sent next day mail, certified. Rarely, does anyone realize this, or use this tactic.
Typical charges of a Timeshare
I have friends who bought a time share 16 years ago, they said they purchased theirs for $17,000. Most of the 16 years their yearly tax and maintenance costs were $500 per year, a year ago it changed to $1000 per year. The timeshares are much more expensive now.
That is a class A Timeshare, the highest value. Let me remind you again that you are “only buying” time to use a space, “not” any real estate.
Currently, a typical Class A time share is in the area of $25,000 principle or more, plus interest, and $1000 per year (lifetime) payments for tax and maintenance. There are different packages available.
Selling A Timeshare Condo
Selling a timeshare is difficult because you don’t have the same high pressure sales tactic abilities that enabled you to sign. The market for used timeshare contracts is tiny almost non-existant. You are competing against current new timeshare sales.
There are companies who promise to “exit your timeshare contracts”, and they may be helpful. Do your homework, and make sure the company is legitimate. In recent news reports many who have used these companies say were ripped off, and their contract was still in tact after they paid the company.
The organizations representing these people say it is best to negotiate directly with the timeshare company to get released from your contract.
You do not have the expertise to do a timeshare presentation on timeshare vacations – to sell it on your own. Don’t make an unwanted timeshare a lifetime timeshare obligation.
Lois Center-Shabazz | Course Delta Agency
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Creating a Sustainable Budget in a Time of Financial Crises
Creating a Sustainable budget is defined as a budget that works to meet all of your short-term and long-term needs. It keeps you feed, clothed, gas in your car, your mortgage or rent current, whether you have a lot of money or times become lean.
To create the lasting sustainable budget you must plan, and do it early. You don’t start when you lose your job, get into a car accident or have any other time of financial crises. Creating a sustainable budget will take care of those issues.
The money you have in good times is budgeted heavily so it will last during bad times. I see too many people who though “caution to the wind”, when it comes to spending. They think they are so special that they will never hit hard times with a job loss, contract loss, or medical emergency.
Don’t be fooled, it happens to folks of all income levels. So, it does not matter if you are low income or uber high income you have budget your money. You never know when the, “well will run dry” or the money will seem to evaporate due to lose of income.
So, let’s get started and create a sustainable budget now. You will create the short-term, the long-term and the budgets for the specific things you need.
The common sense approach to avoiding a time of financial crises during an economic downturn is to guerrilla budget when times are good as well as when times are bad.
Unfortunately, many people don’t think about budgets until finances are in trouble. Start to create your sustainable budget and continue improving it as time goes on.
Chat With MsFinancialSavvy About the Best Ways to Budget Anything
I saw a new story about a young girl, who became a high-income singer, with a contract from a major media company, then came a terrible time of financial crises with an illness. Now her 1.2 million dollar home is being auctioned off. Where did she go wrong? Is she any different than most Americans in her position?
The answer is 1. Apparently she did not understand how to budget the money she earned, 2. She didn’t understand the limits of the money she earned. 3. She didn’t understand that, no matter what your income emergencies happen. 4. She did not create a sustainable home buying budget based on worse case scenarios.
The answer to the second question above is, NO, she is not any different than most Americans, and did not anticipate a financial crises.
Budgeting is not taught in most high schools and colleges or graduate school. Because of that we even have PHD’s and MD’s (doctor of philosophy and medical doctors), going broke due of mismanagement of money or the lack of budgeting skills.
They don’t understand that a financial crises can happen to anyone, so creating a sustainable budget early will prevent problems.
In this article I will give you a few quick tips to creating a sustainable budget using my guerrilla budget method:
1. Live below your means no matter what your financial status to create a sustainable budget.
This sounds like common sense, but many who have common sense and a good income don’t, because you feel money will make up for it.
It does not. Ask all of the broke entertainers who once made millions. The 8 cars, and the 8000 square foot house is only a distant dream.
They think about how they could have purchased 3 nice cars, and a 3000 square foot house, put money in savings, invested aggressively, and they would have been set when the entertainment contracts dried up.
Many get caught in something as simple as not paying required yearly taxes. Pay your taxes first, then pay yourself in savings and investing, then pay your other affordable bills.
2. When you make a lot or are awarded a lot of money
When you enter into a high income or windfall pretend like it has to last you 100 years.
The is a good trick for those who don’t have a lot of self-discipline, it works because you trick your mind into believing the money does not exist, so you are forced to guerrilla budget it.
When you are distracted one day you open your savings and investment account and you realize you did something really smart. You created a sum of money you can actually live off as your business or income falls on hard times.
3. Be conservative with your purchases
There is no law that says when times are good you should waste money. The problems come when you have not grown up with financial discipline; too many income earners do.
Don’t fall in the trap of, “I have to spend big to have quality products”. You don’t. You can get nice clothes, shoes, cars, homes, and education at a very affordable cost and high quality.
Some things that are very expensive, you will later find that you simply spent too much money and could have gotten the item for a fraction of the cost.
Do your homework, do lots of research and get the best item for the best price. This is a major step to creating a sustainable budget.
4. Buy a home and car with a monthly note you can afford
You do not have to max out your monthly income in “monthly bill payments”. That is that your entire paycheck goes to “monthly bill payments”.
Here are examples; Why not buy the certified pre-owned car with a monthly note of one-third of the new car? Put the remaining two-thirds in a couple of different savings and/or investment accounts.
If you lose your job, you can pull from one of those accounts to continue your payments until you get another job.
5. Decide what you can afford based on your income and future
Start with a written budget. Your budget should include cost to run your home (maintenance-rent or mortgage), food – clothes – medicine. Also include things such as getting to work and maintaining a car, going on vacation, and to save, save, save for now and the future.
Everyone has different needs. It is imperative to identify all of your needs you have now or may have in the future. This is an analysis that will take time to figure out.
6. If you have an addiction to expensive “things” work on that problem
That is the number two problem that causes poverty with people who make a lot of money. The number one problem, is “budgeting ignorance”.
If you have an entertainment contract that last three years, spend like it will last three years.When you are an independent contractor on a job that will last two years, live like it is only two years.
When you are self-employed don’t fail to get proper liability insurance, health insurance and all insurance that is required by your industry. For those who are self-employed with an office space lease make sure you understand your lease by talking to a business attorney, before you sign.
The general idea here is to get cosst under control, understand that you don’t need expensive things.
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7. If you work on a contract like the singer above probably did
You have to be especially careful with spending because you will have a big tax bill at the end of every year based on your big income (quarterly after the first year).
When you are an independent contractor of any type – self-employed, contracted worker or any other; you will need to pay taxes by quarter and then year-end.
The worse thing to do is to file too many exemptions so you can have extra money in your paycheck. You promise yourself that you will pay it back, and of course that doesn’t happen. Eventually, you get into a nightmare loop of owing taxes, making payments and getting future behind.
8. Remember that it takes a long time to create a sustainable budget
-Because you have to consider cost that you normally don’t think about.
-You have to consider all timelines for payments.
-Then don’t forget things you may need in the future.
-You can get a simple short-term budget, but a long term budget is ultimately the most important.
-When you do all of the above you creat a guerrilla budget
Go here to understand creating a sustainable budget of your dreams.
Lois Center-Shabazz | Course Delta Agency
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Home Inspections for Home Buyers
Are home inspections for home buyers necessary? In light of the endless possibilities of home defects it is in your best interest to use a home inspector before you purchase a home.
Large defects are very costly but small defects can become costly, if not repaired in a timely manner. Once you have closed escrow, the home belongs to you, and the burden of the repairs is on you, so it is wise to minimize the possibility of home defects before you buy.
Steps to hiring a home inspector for new or used home:
- HIRE YOUR OWN HOME INSPECTOR
- HIRE INDIVIDUAL TRADESMEN FOR INSPECTION
- CRUCIAL AREAS TO INSPECT
- DON’T IGNORE THE ADVICE OF EXPERTS
- BUYING A NEW HOME FOR INSPECTIONS
- BUYING A USED HOME AND GET INSPECTIONS
- NEW HOME OR REMODEL CONTRACTOR WARRANTY
1. HIRE YOUR OWN YOUR OWN HOME INSPECTOR
Hire your own quality home inspection service, not one recommended by your realtor. The inspectors recommended by the realtor will want repeat business from the realtor, so they will have a strong tendency to rush the inspection and overlook crucial defects.
Find your own quality inspector by asking others in the area or go to the American Society of Home Inspectors website.
2. HIRE INDIVIDUAL TRADESMEN FOR INSPECTION
I prefer to hire individual tradesman, electricians, plumbers, carpenters and roofers to inspect within their trade. Most will inspect for free or a very small fee.
3. CRUCIAL AREAS TO INSPECT
The most expensive repairs occur with structural damage, buckling of uneven walls and uneven floors, inside or outside the home. You may seriously rethink your decision to buy a house with major structural defects, for this is a strong sign the house may need to be rebuilt.
Other major structural defects include major plumbing problems, electrical, air conditioning (new air conditioners can run an average of $2500), and roofs ( to go from a leaky roof to a good roof on a small house can cost $10,000 or more).
4. DON’T IGNORE THE ADVICE OF EXPERTS
Now that you’ve had an inspection, take it seriously; get three contractors to estimate the repair job. Ask the homeowner to pay for the repairs before you close escrow or leave money in escrow to cover the repairs.
If the repairs are in excess of the value of the home, or horribly unreasonable compared to the value of the home, ask the homeowner to reduce the price of the home or you should strongly consider buying a different home.
5. BUYING A NEW HOME FOR INSPECTIONS
Some folks think new means perfect, good, great, or in the best shape. This is not necessarily the case. Many new homes have problems, because despite the required inspections, subcontractors and contractors make minor and even major mistakes that sometimes go unnoticed.
Don’t close escrow until the home has been inspected AND the needed repairs are made.
6. BUYING A USED HOME AND GET INSPECTIONS
Used homes present unique problems, they must be inspected by tradesmen who are very honest and experienced in their field. There are many hidden problems with older homes that are fixable but must be addressed before closing escrow.
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I have purchased both new homes and used homes that I had inspected before purchase. One beautiful new home I purchased was built by a quality builder and had more defects than the used homes I have had inspected in the past.
The contractor blamed all of the defects on his subcontractors work when he wasn’t looking.
In any event, I had the contractor fix every single problem pointed out to me before closing escrow. For a few years after closing escrow, I found a few other problems, which the contractor fixed.
7. NEW HOME OR REMODEL CONTRACTOR WARRANTY
Contractors usually warranty most homes for at least five years. Be sure to contact your builder as soon as you find a problem. Don’t let minor problems become major problems by putting off the repairs for a later date. This is why it is crucial to have home inspections for home buyers.
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Tax Scam Victims Avoidance
Tax scam victims have become a targeted work for tax fraud. Paying taxes is a fact of life, it always has been, and it always will be. For years the IRS has warned taxpayers about tax fraud, tax schemes, and plain old individual dishonesty. In many cases the dishonesty can result in stiff financial penalties and the fraud can result in jail. But still, this warning continues to evade some taxpayers. So be for warned.
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This evening on our nightly news one of the potential tax victim was rescued by a tax cab driver. An elderly lady told the tax cab driver she needed to go to her bank. She was not aware that she owed the IRS 25 thousand dollars. He ask her several questions and found out someone called her on the phone and told her to wire money to pay off her taxes.
He convinced her that he did not think it was the IRS, there are several tax fraud calls and he would take her to the police station. They informed her that it was not the IRS who called her. Creating tax scam victims continues in the year 2020, but thanks to an aware taxi cab driver she was rescued.
The IRS wants you to know many tax scams and schemes still exist and is heavily promoted as legal by con artist, and individual taxpayer dishonesty is not an option.
1. Tax Scam Victims
As per the IRS, they look shady. They lurk in the shadows. They try to entice you with promises of bigger refunds, audit-proof tax breaks or sure ways to beat the IRS. But the only sure thing about them is that they can cause you trouble … a lot of trouble. If you are aware of this you can avoid becoming a tax scam victim.
Defend yourself by reviewing the IRS update of the Dirty Dozen – 12 schemes and tax scams prowling for victims during tax season.
Check out what IRS agents are finding in their criminal investigations of crooked tax preparers – and their tips for avoiding these characters.
The IRS urges people to avoid these common schemes targeted to making you a tax scam victim:
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2. Offshore Transactions
Some people use offshore transactions to avoid paying United States income tax. Use of an offshore credit card, trust or other arrangement to hide or underreport income or to claim false deductions on a federal tax return is illegal.
Through April 15, the IRS is offering people with improper offshore financial arrangements a chance to make things right. Eligible taxpayers who step forward will not face civil fraud and information return penalties. A taxpayer involved in these schemes who does not come forward now, however, will be subject to payment of taxes, interest, penalties and potential criminal prosecution.
People interested in participating in the program, called the Offshore Voluntary Compliance Initiative, can contact the IRS by calling 215-516-3537 (not toll-free).
3. Identity Theft
Identity thieves use someone’s personal data to steal his or her financial accounts, run up charges on the victim’s existing credit cards, apply for new loans, credit cards, services or benefits in the victim’s name and even file fraudulent tax returns.
The IRS is aware of at least two recent identity theft scams involving taxes or the IRS. In one, tax preparers allegedly used information, such as Social Security numbers and financial information, from their clients’ tax returns to commit identity theft. In another, fraudsters sent bank customers fictitious bank correspondence and IRS forms in an attempt to trick them into disclosing their personal and banking data.
For taxpayers, it pays to be choosy about disclosing personal and financial information. And the IRS encourages taxpayers to carefully select a reputable tax professional.
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4. Phony Tax Payment Checks
In this scheme, con artists sell fictitious financial instruments that look like checks to pay a tax liability, mortgage and other debts. The con artists may also counsel their clients to use a phony check to overpay their taxes so they can receive a refund from the IRS for the overpayment. The false checks, called sight drafts, are worthless and have no financial value. It is illegal to use these sight drafts to pay a tax liability or other debts.
5. African-Americans Get a Special Tax Refund
Thousands of African-Americans have become tax scam victims and misled by people offering to file for tax credits or refunds related to reparations for slavery. There is no such provision in the tax law. Some unscrupulous promoters have encouraged clients to pay them to prepare a claim for this refund. But the claims are a waste of money.
Promoters of reparations tax schemes have been convicted and imprisoned. And taxpayers could face a $500 penalty for filing such claims if they do not withdraw the claim.
In early 2002, the slavery reparations scam ranked as the No. 1 scheme on the Dirty Dozen list. Following a sweeping public outreach campaign and assistance from members of the Congressional Black Caucus and other organizations, the number of reparation scam claims fell sharply. Tens of thousands of claims were received in 2001, but the claims fell to less than 50 per week in 2002.
6. No Taxes Withheld From Wages
Illegal schemes are being promoted that instruct employers not to withhold federal income tax or employment taxes from wages paid to their employees. These schemes are based on an incorrect interpretation of tax law and have been refuted in court. A recent flurry of court actions has been taken against promoters of these schemes. Taxpayers who have concerns about their employer and employment taxes can get help by calling the IRS at 1-800-829-1040.
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7. Improper Home-Based Business
This scheme purports to offer tax “relief” but in reality is illegal tax avoidance. The promoters of this scheme claim that individual taxpayers can deduct most, or all, of their personal expenses as business expenses by setting up a bogus home-based business. But the tax code firmly establishes that a clear business purpose and profit motive must exist in order to generate and claim allowable business expenses.
8. Pay the Tax, Then Get the Prize
The caller says you’ve won a prize, and all you have to do to get it is to pay the income tax due. Don’t believe it. Someone who really wins a prize may need to make an estimated tax payment to cover the taxes that will be due at the end of the year. But the payment goes to the IRS – not the caller.
Whether the prize is cash, a car or a trip, a legitimate prize giver generally sends both the winner and the IRS a Form 1099 showing the total prize value that should be reported on the winner’s tax return.
Since tax scam victims appear to not be doing their research and reading news reports they are particularly vulnerable, so please pass these tax scams on to the elderly and underinformed.
9. Frivolous Arguments
Frivolous arguments are false arguments that are unsupported by law. When a scheme promoter says “I don’t pay taxes – why should you” or urges you to “untax yourself for $49.95,” beware. These scams are as old as snake oil, but people continue to be taken in, and many have become tax scam victims. And now they’re on the Internet. The ads may say that paying taxes is “voluntary,” but that’s just plain wrong.
The U.S. courts have continuously rejected this and other frivolous arguments. Unfortunately, hundreds of people across the country have paid for the “secret” of not paying taxes or have bought “untax packages.”
Then they find out that following the advice contained in them can result in civil and/or criminal penalties. Numerous sellers of the bogus schemes have been convicted on criminal tax charges.
10. Social Security Tax Scheme
Taxpayers shouldn’t fall victim to a scam offering refunds of the Social Security taxes they have paid during their lifetimes. The scam works by the victim paying a “paperwork” fee of $100, plus a percentage of any refund received, to file a refund claim with the IRS.
This hoax fleeces the victims for the up-front fee. The law does not allow such a refund of Social Security taxes paid. The IRS processing centers are alert to this hoax and have been stopping the false claims.
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11. “I Can Get You a Big Refund …for a Fee!“
Refund scheme operators may approach someone wanting to “borrow” their Social Security number or give him or her a phony W-2 so it appears that the person qualifies for a big refund. They may promise to split the refund with that person, but the IRS catches most of these false refund claims before they go out.
When one does go out, the participant usually ends up paying back the refund along with stiff penalties and interest. Two lessons to remember: 1) Anyone who promises someone a bigger refund without knowing their tax situation could be misleading them, and 2) Never sign a tax return without looking it over to make sure it’s honest and correct.
12. Share/Borrow EITC Dependents
Unscrupulous tax preparers “share” one client’s qualifying children with another client in order to allow both clients to claim the Earned Income Tax Credit. For example, one client may have four children but only needs to list two to get the maximum EITC.
The preparer will list two children on the first client’s return and the other two on another client’s tax return. The preparer and the client “selling” the dependents split a fee. The IRS prosecutes the preparers of such fraudulent claims, and participating taxpayers could be subject to civil penalties.
13. IRS “Agent” Comes To Your House To Collect
First, do not let anyone into your home unless they identify themselves to your satisfaction. IRS special agents, field auditors and collection officers carry picture IDs and will normally try to contact you before they visit.
If you think the person on your doorstep is an impostor, lock your door and call the local police. To report IRS impostors, call the Treasury Inspector General’s Hotline at 1-800-366-4484.
Beyond the “Dirty Dozen,” the IRS sees many more tax schemes. Some examples include home-based business scams, disabled access credit for pay phones and a variety of improper abusive trusts.
“The best advice for taxpayers is to remember the concept of ‘buyer beware,’” Wenzel said. “Think carefully before paying for services or signing important documents.
And don’t be fooled by outrageous promises. If something sounds too good to be true, it probably is.” Don’t help a con person make you one of many tax scam victims.
Reverse Mortgage Pitfalls Require Senior Homework
Understand the reverse mortgage pitfalls so you know the limitations for your heirs and yourself as homeowner:
I have spoken to a few senior citizens who obtained Reverse Mortgages, but felt nothing but regrets afterwards. Perhaps they did not read the fine print in a brochure that is required by FHA to read before they purchase the loan. After getting constant complaints about Reverse Mortgages, the government has changed the program, but there are still many dangers you need to be aware of.
This article will cover the following pitfalls of reverse mortgages:
What is a reverse mortgage?
How does a reverse mortgage differ from a traditional home loan?
The limitations of a reverse mortgage
Homeowners insurance and taxes
When a reverse mortgage must be paid or you are forclosed
Problems heirs have associated with reverse mortgages
Can heirs take over the reverse mortgage or does it have to be paid off?
When are reverse mortgage repaid?
What is a reverse mortgage?
A Reverse Mortgage is a type of loan open to seniors that are at least 62 years who have a home that is paid off or has a low balance, and they live in the house, and follow the terms of the loan.
The problem that many seniors seem to complain about is that they did not understand the very strict terms of the loan before they signed on the dotted line. Some told me the terms were so strict, it made their lives unbearable trying to live under the guidelines and stay in their home.
How does a reverse mortgage differ from a traditional home loan?
The Reverse Mortgage is different than regular home loans in that it pays you from your loan proceeds, and is available regardless of your current income. The up front fees and cost of the loan, usually taken from loan proceeds are very high–much higher than a regular home loan. You are not required to make payments on the loan while all signers on the loan are alive and live in the home. When the last signer of the loan dies or is out of the home for one year, the loan has to be paid off. A amount of time given to pay off the loan is short, so heirs must act quickly.
The limitations of a reverse mortgage
The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home, sales price or FHA’s mortgage limits, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you may borrow.
Bare in mind that borrowing costs are far greater than a conventional second mortgage, and once you get a reverse mortgage, you can’t get another loan on your home.
Homeowners Insurance and Taxes Must be Paid While You Are in The Home
With a Reverse Mortgage, you don’t pay monthly principal and interest payments and the lender pays you according to the payment plan you select. The payments will accumulate and add a balance to your home as a reverse mortgage loan that will be responsible for your heirs if they wish to keep the home.
Like all homeowners, you are still required to pay your real estate taxes, insurance and other conventional payments like utilities. If you get behind in real estate taxes or other required payments, you could be forced out of your home by foreclosure.
With an FHA Reverse Mortgage you cannot be foreclosed or forced to vacate your house because you “missed your mortgage payment.” But, you could be forced out for many other reasons, some of them subjective like allowing the home to fall into unacceptable disrepair. Your local property tax holder can foreclose if your property taxes are not paid, so can the reverse mortgage company.
A Reverse Mortgage must be repaid in full if you meet the following criteria:
1. When you die or sell the home.
2. When you do not pay property taxes or hazard insurance or violate other obligations.
3. You permanently move to a new principal residence.
4. You, or the last borrower, fail to live in the home for 12 months in a row.
5. An example of this situation would be if you (or the last borrower) were to have a 12-month or longer stay in a nursing home.
6. You allow the property to deteriorate and do not make necessary repairs.
A subjective evaluation listed above is, “violating other obligations” that are normally listed in fine print. It is important to read all the information you can get from a non-sales person before considering this loan. Another subjective evaluation is if you “allow the property to deteriorate and do not make necessary repairs”. This gives way too much power to the lender to take your home if they feel repairs are not
adequate.
You can receive the money in a few different ways: In payments, in lump sum, or the combination of payments and lump sum. It’s better to receive the money in payments to guard against premature spending.
Typical Senior Complaints of Reverse Mortgage Borrowers
Complaints I heard from seniors I consulted with were 1. They felt uneasy with the amount of monitoring. 2. If the money is taken in lump sum, there was a tendency to spend it quickly on unnecessary things. Remember, once the loan is taken, there can’t be another loan taken on the house. 3. Seniors have complained that after taking out a Reverse Mortgage the loan officer strong arms them into taking out expensive insurance they don’t need and can’t afford, such as Long Term Care Insurance.
After doing your research and reading all of the fine print about this loan, call a HUD counselor to be sure you get all of the facts before you decide this loan is for you.
An alternative to a Reverse Mortgage is to sell your house outright, place the money in the bank, and have the bank send you a monthly check to live off, in an inexpensive senior apartment. Another option is a traditional second mortgage IF, you can get a low interest loan AND easily afford the payments, and can keep up the payments if you are sick or incapacited. You should have a responsible person to help you.
Complaints Heirs Have of Reverse Mortgages
The complaint some heirs have, is they were not successful in getting the remaining equity out of the home when their elderly relative dies. Currently, some heirs have told me, 1. They did not know their parents had a reverse mortgage and therefore did not act quickly to get a mortgage to replace the loan or sell the home. 2. another common complaint heirs have told me is they weren’t given enough time to get a new loan to pay off the reverse mortgage or sell the home and were therefore foreclosed on.
3. One women I talked to who actually worked at a Reverse Mortgage Company says that a common problem was that no one in the family could qualify for a loan to pay off the reverse mortgage before their time expired – the reverse mortgage company only gives them a set number of months.
Some stay in the homes for a few years, but with some it is only six months – it depends on many factors. At least one heir is supposed to take classes with the homeowner so they can get all the facts or the mortgage broker is supposed to give them all of the necessary information. This does not always happen.
Can heirs take over the reverse mortgage or does it have to be paid off?
When a homeowner over 62 takes out a reverse mortgage the mortgage payments or principle and interest add up in an account overtime. It does not have to be paid back as long as the person or persons who took out the mortgage are still alive and living in the home. The younger a person is when they take out a reverse mortgage, the higher the balance will be when they pass away if they live long.
Consumer Finance on Reverse Mortgages
But, what happens to that balance that has accumulated in an account over time? Can the heirs inherit the balance and keep living in the home rent free as the balance continues to accumulate. No! The heirs are required to make contact with the company on a regular basis and let them know that they are working hard to get a new loan to pay off the reverse mortgage balance left by their parents or they are working hard to sell the home.
If there is a balance left after the home is sold and the reverse mortgage is paid off, the heirs will get the balance. If the reverse mortgage is large or has built up for a long time, even if it was small, the balance could be large and leave nothing to the heirs.
Avoiding Reverse Mortgage Pitfalls Work Best When:
The homeowner has read the FHA bulletin on reverse mortgages and taken the reverse mortgages class to understand the loan.
The homeowner has a responsible child with excellent credit who can qualify for a new loan or sell the home as soon as the last homeowner on the loan passes.
Sometimes it is best to take the money in payments, but if there are no responsible heirs it may be best to take all the equity, put it away, live off a small draw from the bank and leave the rest to heirs.
The responsible heir must communicate with the lender and stay in contact after the last homeowner dies to understand how reverse mortgages are repaid.
The homeowner ALWAYS pays required taxes and insurance while in the home. Also, the homeowner must maintain the home.
Because the interest and principle accumulates while the homeowner is alive there is always a possibility that all of the equity may be exhausted and the heirs could get nothing, especially if the homeowner takes the loan early, for example at 62 and dies at 92.
How Bad Financial Habits Can be Replaced with Good Financial Habits
In This ” Bad Financial Habits” Article You Will Read:
1. The first step to replacing bad financial habits with good ones are realization.
2. The second step to creating good financial habits is to cut up credit cards.
3. The third step is to stop bad financial habits when you start to save.
4. The fourth step is to get a higher paying job or negotiate a higher salary.
5. The fifth step to changing financial habits; is to find a cheaper place to live.
6. The sixth thing to do to get rid of bad financial habits is to monitor.
7. The seventh thing to do to stay out of bad financial habits; is to surround yourself with positive people and stick to a budget.
Surprising as it may seem, many who have bad financial habits don’t understand that they do. This is because of the extent of their financial upbringing or lack thereof. Some kids are taught very young that they should have a piggy bank and budget their money. They are also taught they can’t have everything they want, and money doesn’t grow on trees.
Other kids are from the “my kid has to have everything I did not have” parent. These parents don’t understand that no matter how much money they spend or credit they use to give your kids what they want, the child never feels enough. This happens because kids, or even young adults start using these things to give themselves a false sense of feeling good. At least this is the message they get from parents, grandparents or other relatives. They teach kids to use things to solve problems the wrong way, with things.
So, buying things, and overspending at any income, becomes a never-ending spiral. The old stuff gets old, outdated, boring or broken and there is a constant stream of new stuff presented by stores, the internet or television advertising. The joy is usually short-term, but the inability to solve problems and other issues organically, not with things, becomes a long – term problem.
Once you get on your own, you find out there is no one to pummel you with a constant barrage of gifts so you get into huge unbearable debt, until you have the revelation. The revelation is, “I don’t have to live like this, constantly trying to make myself happy with things that don’t provide long term happiness and put a smoke-screen on the real issues I have. I understand that I am making myself miserable with the attempt to be happy with unlimited things.
There is another way, you finally realize that you have bad financial habits that are destroying your peace, joy and happiness. Now, all you must do is figure out how to replace those bad financial habits with good one.
The first step to replacing bad financial habits with good ones are realization
The first step to getting good financial habits is to realize you have bad financial habits. You made that realization above when you moved out on your own or married, and concluded that you would have to be deep in debt to get most of the things you wanted.
With that said, you realized that the debt was making you miserable. You got sick when you went to your mailbox and opened your bills, you stayed up at night trying to figure out how to shift the bills so you could pay at least half of them this month, then of course the occasional bill that slipped into collection agencies and you had to turn off your phone to get peace on your day off work. It was an endless cycle of headaches, and all you wanted was peace of mind, joy and happiness. So, you started to think that it must be possible, since the current situation is so miserable.
The second step to deleting bad financial habits is to cut up credit cards
You had a ceremony cutting in half, all but one of your credit cards. That one credit card will be left at home except when you travel – you need it to rent a car or to stay in a hotel.
You make a spreadsheet to list big things you can do to immediately make money to pay off credit cards.
Stop spending money on everything you don’t need to buy, or need to do.
Stop eating out – it is expensive and unnecessary.
Buy your groceries at a discount and shop with coupons.
If you have a car buy a monthly buss pass IF it is cheaper to ride the bus or train, if not use your car only when it is necessary.
Ask your parents if you can move back in to save money and pay off debt, with a timeline to move out. 
If you don’t have parents who can help, ask a friend or relative if you can rent a sofa for at least 50% less than your rent. Use the 50% savings to pay off debt.
Before you move sell everything you can sell and pay off bills with the proceeds.
When you get your bills down low or to a manageable amount, go to step 3.
Keep a spreadsheet of your debt payoff and your budget. Use google spreadsheets.
The third step is to stop bad financial habits when you start to save
Open a savings account, have money automatically transferred from your paycheck or your checking account to your savings account – at least 100 dollars a month.
Now you are saving money by not paying market rent, at least 400 per month and the 100 auto deduct to your savings account. You should be able to save 500 per month.
Keep a spreadsheet of your savings and timeline for savings.
Pay extra to credit card principle every single month. Pay off the lowest balances first.
Save dollars and coins in a large vase so when you need small things you can take them from your cash stash.
The fourth step is to get a higher paying job or negotiate a higher salary
Some people are afraid to leave their comfortable job or talk to their boss about a higher salary. They feel it may be their doom. They ask themselves questions like: Would if my boss gets angry if I ask for more pay? or Would if my new job doesn’t work out? Do your research first. Find out what you must do to make yourself more valuable to your boss and company, then go to your employer and tell them how you have improved the business by giving at least 3-5 major things. Make sure he offers the first salary move, then if it is not enough you can counter it and let him know you would like more and why.
If you find the salary is simply too low with little opportunity for advancement look for another job. Before you start to look for another job, do lots of research to find out what you qualify for abd whats available. Talk to people in the field and take an online class or a few to improve your skills before you start to look. Improving yourself with online courses will also help with your current job. Just don’t take expensive courses that will put you in debt. There are many free or inexpensive courses online.
The fifth step to changing bad financial habits is to find a cheaper place to live
After you have gotten your debt paid way down, you have saved a substantial amount of money, you have trained yourself with the mantra, “money doesn’t grow on trees – I learned that the hard way”.
Then you can make more major changes.
Start looking for an affordable place to stay after you have increased your salary, or you get a higher paying job. Try to stay away from 12-month leases. It is hard to find a place to rent that is month to month, but it is possible.
The sixth thing to do to get rid of bad financial habits is to monitor
You now must monitor everything you do. Use your spreadsheets monthly to monitor your debt pay off, savings, balances, and budgets on everything. As you pay down debt, increase savings and come closer to your goals you will notice a peace, joy and happiness space surround you. Remember this feeling so you don’t go back to nausea, headaches and sleepless nights you get from high debt and bad financial habits.
The seventh thing to do to stay out of bad financial habits, is to surround yourself with positive people
Don’t forget to include your student loans in your debt payoff and create a spreadsheet for them. If you have student loans do everything you can to make the payment in full and extra to principle to pay them off early – that may include a second job. When you make extra payments to principle this cuts out not only the principle, but the interest associated with it. Associate with others who are paying off their student loans early.
Now that you have understood how you came to have bad financial habits and how you got out, try to surround yourself with people doing the same. It may be a family member or a good friend but choose wisely and work with that person to help each other stay away from bad financial habits and keep your good financial habits flowing for life.
20 Smart Money Moves in 2020 For Long Term Financial Growth
What are smart money moves?
A smart money move is a tried and true method for creating financial growth and prosperity after education, research, deep thought, mentorship, and experience has guaranteed they will work. Here are some smart money moves for you to begin with, I will discuss:
- Short term smart money moves you can start now.
- Long term smart money moves that will permanently change you
- Understanding the types of smart money moves that will save your financial life
What are the three types of smart money moves that will benefit you?
1A. Short term smart money moves you can start now
It starts with a guerrilla budget. Judging from the way many of you spend money, I can see that you are not close to any budget, much less a guerrilla budget. A guerrilla budget, as defined by me is “your budget on steroids”. You become the master of your money, not advertising, not spoiled kids, not friends who have financial emergencies, not things you don’t need.
It is you, your tracking your spending and getting rid of everything that is not necessary. Sure, after you get your debt and bills under control you can budget in a few things you enjoy, but first you will start with paying your necessary bills with ease, getting your debts low, and creating a system to have emergency money for your emergencies only.
Learn to say the word no. If you can’t afford it, it should not be a part of your spending process. Your short-term financial goals for the new year should include the following.
- Create a budget planner
You know how much money you take home; you know where you are spending on things you can’t afford, so this is where you start.
- Track everything you spend
Sometimes you spend money that we are not aware of because we don’t pay attention to what we are spending on. Create a budget for everything you spend money on.
Maybe you can’t afford a necessary item this month, but if you pay off another item, or save enough money for a new item you need, you can get it in 3 months. Whatever you do, don’t keep charging for things you don’t have money or income for.
- Plan what you need
Write a plan for daily needs, weekly needs, monthly and for the year. Do you plan to return to school in three years? You need a plan for that. The plan should include an affordable public school where student loans are kept to a minimum and the education is an absolute must for your field.
Many people gain access to good paying jobs, without college, by working their way up in a company getting experience as they go. Many jobs will pay for you to take courses to gain knowledge and some will pay for a college degree.
- Plan what you want
Do you really know what you want? Don’t just take a stab in the dark, know what you want based on experience, knowledge, and research. Many folks get useless education or degrees because they did not research the field and understand “exactly” what is involved.
Occupations change over time, what was in demand 20 years ago, may have no demand now. But some people are still getting into fields with student loans and years of study, only to find out they made a huge mistake and there is no demand in that field.
5. Delete what you can do without, and may not want
Make a list of the things you have or are doing. Then make a second list of the things you can do without. From cable tv to going back to school. What is necessary right now? What can I do to make my life more affordable? What can I eliminate to help get out of debt? These are the questions you need to put at the top of your list.
What are long term smart money moves?
2A. Long term smart money moves
If you will ever have enough money, you must learn sane savings techniques, these techniques have been created by me for you. Your long-term financial goals should start with money all over the place. Sounds crazy, but it is possible, no matter what your income. There are many ways with these smart money moves.
- Start with the dollar and coin jar, save regularly here
Get two simple jars, at least a foot high. Every week empty a handful of coins in your coin jar, place at least a few dollars in your dollar jar, between $2 and $10 dollars. This money will accumulate until the jars are full. Don’t use any of the money until the jars are full.
When they are full, you can use them for inexpensive, minor emergencies. But they need to always be half full. When it gets full, take out the coins, redeem them at the store where there is a coin exchange, take the money from the coins and take half the dollars to the bank.
They will be placed in your passbook savings accounts. The remaining dollars will be used for your small emergencies or expenses.
- Don’t be afraid of a basic passbook savings account for emergencies. Yes, I said passbook savings account. This is your first great savings account. Now, I know what you’re thinking. You are thinking, “I am not getting much in the way of interest”.
The interest is not the important issue at this point. The issue is accumulation of funds for short term emergencies’ and long-term smart money moves. This is where we accumulate.
Your short-term smart money moves will be born in your passbook savings account. Everything sprouts from here. Try to put at least $50 to $200 a month in your passbook savings account.
- Use your overage in your basic account every six months to fund a higher interest account as you accumulate money in your passbook savings account, it will be added to pay off bills, purchase short term more expensive emergencies or add to a higher interest savings account.
- Use your passbook account to fund your needs
Write down your immediate short-term money moves as they relate to your needs. An example would be to pay off a $400 credit card balance when I accumulate $600 in my passbook savings account.
- Use your dollar and coin jar to fund your immediate wants
The dollar and coin jar are for super short-term smart money moves as well as to fund your passbook savings account. A super short-term money move would be to fix the cracked screen on my cell phone or hire a gardener to weed and trim your over-grown yard.
3A. Understanding the types of smart money moves that will save your financial life
If you don’t understand the smart money moves of big thing buying you can ruin your finances for a long time, buying cars, homes, and an education.
I talk to people all the time who tell me they wish they would have put more thought into purchasing a car, going back to school or even buying a home. There is never a rush.
Making the wrong decisions when it comes to major items can cost you hundreds of thousands of dollars you could have saved. Remember, you have many choices, and there is never a need to rush. Do your research, do your homework – identify all your options.
- Make “paying off” a car or credit card a goal
I talked to a young girl just a few months ago. She wanted to get her finances in order. I told her you have first start with critical thinking, not allowing advertisers to tell you how to purchase. They recommend high-profit items that benefit their pockets, not yours.
I told her the example of refinancing a car. She, said “STOP”, I already made that mistake. She said she saw an ad to refinance her car for a lower interest rate, she did and then her sister pointed out to her, “do you realize that you just added two years to your car note?”.
She told her, after looking at her paperwork that the two years she had left on her car loan was now four years with her new loan, adding an additional two years. She would have been better off paying a slightly higher interest rate she had and paying off the car in the two years she had remaining.
That was not a smart money move and shows how it happens when you allow propaganda advertising to influence you.
- Use the monthly budget you have from a payoff to save money
When you pay off a bill, you now have extra money, use at least half of that money to place in passbook savings. The other half will be used to put on other bills.
- Do research on a new car if you need it
New cars are expensive especially when you add the first-year warranty service and the cost of general maintenance and vehicle registration. So, look hard for an affordable new car or consider a CPO, or certified pre-owned car. These are cars that you purchase on the used side of a new car lot, they are less than 5 years old, have about a 150-point check and you get a warranty.
- Buying a home is still possible in some states with a middle income, start your research
Homes are getting extremely expensive in the larger more populace states such as California, New York, New Jersey, Washington D.C. as well as others. But there are many states especially in the south and mid-west where you can buy affordable homes if you are middle income. But I caution you to do your research, do your homework first.
- Set a budget for the home you can afford
The most important thing you can do before you think about purchasing a first home or even a second or third, is to set a budget. That budget is based on what you can afford after your down payment, after you have paid off bills, and after you have sold things you don’t need, an example would be a car with a large car payment, may be something you could get rid of.
16. Start a savings account for a home you can afford
After you establish your affordability index, you can now start to save for your new home. I have discussed the many ways to save money above, so you have many ideas. You will need to save for the down payment, the escrow costs, and any repairs that may be needed.
17. Choosing a college; there are no guarantees, research is paramount
Going to college in the United States is tricky these days. The number one goal should be to keep you and your parents out of debt. There are affordable public colleges, consider those first. Private colleges have a lot of hidden cost. For-profit colleges, (that is those that advertise on television constantly and are located online only, or in a strip mall or office building – usually no real college campus, they have quick classes), the cost is high, and the jobs are few. Some employers will not hire from for-profit colleges.
18. Focus on finding an affordable not-for profit college, preferably brick and mortar There are many affordable non-profit public colleges. Do your research be through, keep student loans at no or low, very low.
19. Find great careers that don’t require college
There are many careers that don’t require college and some online course that are very cheap, but have great careers connected to them.
20. Research community college degrees that pay well, computer science, registered nursing, dental hygiene, at a community college you can get a certificate or an associate degree. From that degree you can get a great starting job, depending on the course matter or you can transfer to a 4-year college if your state permits.
The following demonstration shows you that smart money moves can and will put you on tract to great financial growth when you pay attention to the details.
How To Go To College and Pay Off Student Loans, Debt-Free College Should be Your Goal Part 3
Pay Off Student Loans by Keeping a Reasonable Balance When You Graduate in Four Years
Keeping a reasonable student loan balance requires an immense amount of planning, organization, and discipline, but you can do it. Some kids can’t pay off student loans because they are spending way too much time in college, going five or six years for a four-year degree. Some have to work more than expected, some drop classes, some feel they can’t get all of their classes, and some don’t force themselves to decide on a major course of study when it is time.
Organize yourself, and graduate in four years no matter what. If you want to do something else later, pay for it with cash after you start working, or use your employer tuition reimbursement plan some employers offer.
Some students drop classes, some feel they can’t get all of their classes, and some don’t force themselves to decide on a major course of study when it is time. Organize yourself, and graduate in four years no matter what. If you want to do something else later, pay for it with cash after you start working, or use your employer tuition reimbursement plan some employers offer.
The Nightmare Scenario of Getting Student Loans and No College Degree
Budget For School Loan And College Here
It seems hard to believe that students are taking out thousands of dollars of student loans, and not getting the college degree that comes with it. But, that is happening all the time. I recently listened to a radio show where the host asked listeners to call in with their student loan balances and tell if they got their dream job. He got the surprise of his life when several people, calling in from all over the region said they had $50,000, $70,000 and even $100,000 in student loans, but left college with no degree.
They gave various reasons; some fell behind in grades and were asked to leave, some became ill and had to leave, some did not qualify for the last semester or year of student loans to finish their degree because they reached their maximum eligibility, some had to quit and work awhile and did not return.
There were many reasons. Here is the sad part, once the loans payments start if payments are not made you are sent to collections, when you are in collections you have to jump through hoops to qualify for financial aid again, so you can return to school. If you don’t pay your way out of collections and start making payments’, your student loan balance will increase exponentially every single year, due to added penalties’, including collection company fees and interest rates. Avoiding collections is the most encouraging reason you should pay off your student loans as soon as possible.
Get More Student Loan Facts Here
Pay Off School Loans as Early as Possible to Avoid Possible Catastrophic Events
If you can’t pay off student loans after your grace period is over because you don’t have a job in your field, you can apply for government help. You can get an Income Based Repayment Plan or IBR Plan set up by the federal government, created under the Obama Administration. When you are adequately employed your payments will return to normal. In addition to paying your school loans no matter what to protect your lifelong credit, think about paying them off early. Parent loans are not eligible. The bad part of the Income based repayment plan is that, your payments are so low they usually don’t cover most interest or principle. This causes your balance to balloon. I have had students tell me a balance went from $30,000 to $70,000 in a few years or even worse. This is one reason you should do everything in your powers to pay your full payment immediately, and extra to the principle will pay off your student loan early.
When you pay extra money to principle, you can pay off your loans early. Do your research with your school loan providers, and make sure you pay them off correctly and monitor your statements. Another way to bring down your loan balance is with the governments [service oriented repayment plan] if you work for a non-profit.
Get Debt-Free College by Knowing Your Options, Go Here
A Problem Many Students Don’t Discover Until After They Are Enrolled
Most financial aid packages at four-year colleges cover only 80% of costs for the poorest students as well as everyone else, an exception is a full scholarship that covers all income levels. Many poor and middle-income students don’t discover this fact until the end of their freshmen year.
Here is an actual example a college student gave me: a young man was told his college would cost $13,000.00 for the year, all but $2500.00 was covered by his financial aid package, he wasn’t told about this gap in financial aid until the end of his first year. His single mom had no money to help him.
He was asked not to come back until he could pay the $2500.00 balance. They told him the computer would not allow him to register. Another case, that was taken up by a local senator, is that of a young girl who took out $55,000.00 in school loans, she was told that was her maximum, and needed to find another way to pay for her last year and get a degree. She informed them that she had no other way. You can find out how difficult it can be to repay student loans by reading about it at the Student Loan Justice site.
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Read more about colleges and cost in the free downloadable eBook, Budget Planner for College and Avoiding Student Loans
Lois Center-Shabazz | Course Delta Agency
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