Organization & Planning

Things To Do Before You Retire

Whether you are just starting out or nearing retirement, there are things you can do now to make retirement easier for you. You don’t want to retire and not have the money to do what you want. Here are some things you should think about:

Do you have enough in your emergency fund? This past year many people were laid off, furloughed and/or unemployed. An emergency fund helped many get by. These funds will help you with an unexpected need for funds i.e. fridge dies and needs to be replaced, your car breaks down and you need to rent a replacement car, etc. Life happens whether or not you have the funds. Create or increase your emergency fund to cover 6 to 12 months of your expenses.
Have you maxed out your retirement contributions? You may want to fund your retirement accounts both through your employer (401K, 403B, 457, etc.) and your personal (IRA and Roth) accounts. You can never have too much money for retirement.
Is your budget balanced? One of the biggest mistakes you can make is to have more expenses than income. If this is the case, you will be accumulating debt and therefore not savings money. Eventually, this could snowball and you will be a slave to your debt. Make changes now to live within your means.
Is your debt paid off in full? Just like living within your means, having your debt paid off in full is important. When you retire, you will be living on less income. Having debt paid off will help you living within your means. Make a plan to have your debt paid off.

According to AARP, more than half of the full-time workers age 50 years and above will lose their job involuntarily. Keep track of your finances, live below your means and be prepared for whatever comes your way.

Goodbye 2020, hello 2021!

2020 was a year for the record books. This past year has brought many issues for many people, from job losses, reduced wages, not to mention healthcare issues. If this past year didn’t convince you that you need an emergency fund, I am not sure what will.

For us personally, we have had job furloughs and reduced hours – therefore less income. Luckily, we have an emergency savings to help us out. In addition, we took on part time weekend jobs for additional income. What about you, how are you surviving?

Our goal for 2021 is to get our finances back on track – replenishing our emergency savings and eliminating debt. Fortunately, we are back at work and earning income (and we have kept the additional part time work). So here is our plan:

We continue to automatically save a portion of each paycheck.
We have made a plan to pay down some debt we accumulated.

Notice that we are doing both at the same time. Personally, I don’t believe that all your money should go to paying down your debt while not saving anything. If you have an unexpected expense, then what will happen? You will go into more debt. That’s why I believe in doing both at the same time.

For us, we are using the snowball method to payoff the debt we have accumulated. What is your plan to get back in track in 2021?

Who handles the finances in your relationship?

I met a woman who asked me some questions when she found out what I do for a living. This subject is one that all of you should be aware of and in honor of Valentine’s Day, I wanted to discuss joint finances. You wouldn’t believe how many people this affects.

Are you married or in a relationship with joint finances? Even when couples share accounts, living space, or property, it’s typically one person who handles the finan love and money ces in a relationship – paying the bills, savings, investing, etc. But the other person shouldn’t be left in the dark. Think about your future, I have meet many who have no clue on how their finances are handled and then something happens and they now have to take charge.

Because this is your joint future, both should know what is going on and how to access the information at any time. The definition of the word joint is defined by Merriman-Webster as “united, joined, or sharing with others”.

Both of you should be making decisions together, understanding where you are today with your money and where you want to go for the future. You should both know the names of your banks and investments and how to access these accounts, especially if you use online accounts. Think of it this way, if the person handling the finances is not able to do it – what would happen? Could you put food on the table? Would the utilities be paid to be kept on?

Remember, too, that your children can see how the money is handled in your relationship. What you do, and don’t do, shows them just as much as what you tell them.

I also believe that each person needs to establish credit in their own name and if you are listed as a co-owner on the assets you should also be listed as a co-owner on the liabilities. What that means is that if you own a home (your name is on the deed) you should also be on the mortgage.

Many partners are left out of the finances. If that’s you, and something happens to the person who handles everything, you are going to have a difficult time. You may find that the bank accounts that you thought were joint are not. You may find that you thought you owned the home you live in, but you don’t. You may find that you need to open a credit card or take out a loan and you have no credit in your name.

All this happens more times than I can count. If this describes you, then you need to have a conversation today with your partner. You need to what know what assets you have, what liabilities you owe and have a plan for moving forward to achieve your goals. The first step is having this conversation.

Credit Card To The Rescue

For several years, we were planning this big vacation for this year. We would be visiting several European countries over the course of three weeks. Lots of time and efforts was put into the planning and coordinating with friends we would be seeing along the way. Enter 2020 and the pandemic, and we cancelled everything.

That left us with many refunds / credits to pursue. The airlines tickets were amazingly easy, we cancelled, and miles were returned to our account within days. We have a credit for future travel – easy. Hotels were all booked without a deposit – so that made cancellations easy. Excursions were fairly easy to cancel, although we have credits for one to use in the near future (I hope).

Now on to the hard part. We chose to cancel our cruise before the cruise line cancelled the cruise. We did it before final payment, as we did not want to have our money tied up. Now, we needed to get back our deposit plus some extra charges. We cancelled our cruise more than 90 days in advance, so all was refundable. We understood that refunds were taking quite a while and were patient. The credits started to come in and various amounts. No amount refunded was equal to the charges. So, we totaled up what was owed and started to subtract the refunds, but not all the money was returned. (Thanks to meticulous record keeping, we knew what was owed to us and how it was paid for).

Why is this important? Because when all was done, we were not made whole. We were shorted some of our money paid. We ended up filing a dispute with our credit card company. When you use a credit card for payment you have the added benefit for protection. We were able to provide all the details, original charge information and all the calls / emails to rectify the situation. This is important for your dispute case. Then just this past week, the dispute was resolved by our credit card company and we are all set, and we were made whole.

When you find yourself at your wits end and frustrated, know that your credit card company can help you resolve the situation. Remember this only works if you use a credit card for payment.

Your Financial Health

Do you ever wonder how your financial pictures stacks up? Are you on track to meet your goals? What do you need to still do? These and other questions are always on the many people’s minds.

I have discussed the importance of having an emergency savings, a budget to know where your money is going, great credit /score to have the best interest rates when you need to borrow and minimal high interest debt. Check out some of my past emails for more information on these topics.

This is a great article Six Numbers Reveal the State of Your Financial Health. How well do your finances compare to these six areas? All are important areas that should be goals for you to accomplish with your finances.

The Holidays Are Here

The holidays are here. Yes, with many retailers starting there holiday shopping sales early this year, are you ready? This is a good thing, if you need to stay within a budget, start early.

First, make a list of all the people on your holiday gift list, then see if you can make changes.

Could you give a family gift instead of individual gifts?

Can you go in on a gift with someone else and share the cost?

Would a name draw work for the family party? With a name draw, each person buys only for the person whose name they drew. It’s fun and inexpensive. Do a separate drawing for the children so each child receives one gift and gives one gift. Make sure to set a dollar limit that everyone can afford.

Once your list is complete, set a firm amount for each person and don’t go over. The grand total of all your gifts should be a realistic amount that you can afford. Be honest with yourself and don’t overspend. You’ll regret it when the bills start coming in.

When shopping, keep your list of people and your budget amounts with you. Check the sales fliers now because holiday sales are already starting. Big retailers are also adding holiday layaway plans. Layaway plans work great if you know your budget. They allow you to make affordable payments without using a credit card.

You could also try giving gifts that don’t cost a lot of money. Service coupons are a wonderful gift. For example, you could cater a meal for a family that has a busy lifestyle. Try an inexpensive but meaningful gift, like a photo CD or memory album. The choices are endless if you take the time to think of what each person might enjoy most. This year with being at home more, I have come up with some great gift ideas that are meaningful, but not a budget breaker. I can’t tell you what they are as family members ready my newsletter.

The most important thing this holiday season is to have fun and enjoy your time together. Create new memories instead of new debts.

Decluttering Your Financial Records

Since we have all been at home for months and doing things around the home, I thought I would rerun this appropriate newsletter about what you need to keep and toss for your financial records.

Here is what you can get rid of:

Paystubs – Do you have a stack of them? You can get rid of last year’s because you have a W-2 that summarizes what you’ve earned. Keep the W-2. Make sure they match before shredding.

Bank Statements – If your bank gives you an annual summary or statement, then you can get rid of all the monthly or quarterly statements, but keep the annual summary / statement.

Tax Returns – Generally, you can get rid of tax returns that are seven years old or more (2013 and older) along with the supporting documentation. However, you will want to check with your tax preparer if you:

bought, sold, and/or own a home
hold certain investments
received certain gifts
have any other special circumstance that requires you to keep related paperwork indefinitely.

In other words, check with your tax preparer before shredding your returns.

An alternative to paper files

Keeping your records on your computer is a great alternative to paper files. We had a lot of paper clutter hanging around, so I started the process of scanning my records as pdfs. If you need a piece of documentation, it’s much easier to locate and open a single pdf than it is to search through a big, cluttered file full of paper. The best part is, that you don’t have to refile the pdf after you’re done looking at it. It’s also easier to fax or email a pdf if needed. Think of all the times you’ve needed to share information about insurances, taxes or rebates. Computer files are great to work with. Remember to keep a back up of your files. You wouldn’t want to lose them if your computer crashes.

Make sure to shred

Remember when I say “get rid of”, I mean for you to shred each and every document that has your personal information on it before throwing it away. You don’t want to offer dumpster divers an opportunity to steal your identity.

Call your tax preparer to see what you need to keep and start to go through your paperwork to eliminate what you don’t need. Happy Shredding!

Simplifying By Reducing

Yesterday, I told you what we did about the paper clutter. Today, let’s talk about the other clutter that was in our home.

To be honest, we have simplified and reduce a lot, but we still have more to go. We inherited many items from our families and I found that the sentimental items were the hardest to get rid of. For me this was the hardest. But I have come up with a solution that works for me and maybe you too.

We purchased our families home. And along with that came these items. What was I do with them? At first it was easily to toss many items. But then, I was left with the hard stuff. Those sentimental items that I didn’t want to keep but didn’t want to toss either. That was my dilemma.

This is what I have done to simplify the items in our house

My dad was a great athlete and had so much memorabilia. First, I decided that I wanted to remember all of this, so I took photos of all the items I wanted to remember. I have the memory and the photo now, so I was ready to get rid of the items. But what could I do with these items, it didn’t seem right to toss them. For his school memorabilia, I contact the schools and donated the items – yearbooks, sports uniforms, programs, pins, equipment, etc.
Nostalgic items was another category. I purchased a book called Trash or Treasure and contacted collectors. Here’s a couple of examples – I sold a metal toy to a collector for $500, I sold my mother’s cameras to a company in the mid-west, family china to a company that buys it for people seeking replacement items for their collections.
Boxes of newspaper clipping, from my fathers sports career. Just finished scanning all of these while at home during the pandemic.

I am down to the last few items and then I will be done. We have eliminated boxes and boxes from our basement and I am happy with where the items are now..

Simplifying By Reducing Paper

Do you find yourself swimming in paper? We did.

There are things you need to keep (tax records, purchase receipts, home expenses and more), but there are the other things that we seemed to keep as well. So much so that we had several files cabinets worth.

Over the past few years, our goal was to simplify and reduce the paper files we kept. This is what we did:

Scanned and digitized the family photos, slides and movies – this was a huge project
Scanned bank / credit card and investment statements
Eliminated manuals – we can look it up if we need to refer to this online
Scanned income tax returns
Scanned medical records
Scanned and organized recipes – this eliminated all the recipe cards from my mother and many cook books too

Now most files are scanned and backed up and the paper is eliminated. It’s such a great feeling when there is less paper. As an added bonus, we are down to one file cabinet. We sold the other file cabinets for some extra cash.

Remember to check to find out what you are required to keep and for how long before getting rid of your paper.

My Journey To Simplify

After having time to reflect these past few months, I have come to the conclusion that I want to simplify my life. I have too much going on and don’t want to run around at this hectic pace anymore. If I have learned anything these past few months, it’s to slow down. I have enjoyed our daily walks in the neighborhood, meeting new neighbors and just seeing the beauty of the area. These little simple things are making me happy.

What I realized is that I want more free time to do what we want when we want and not be guided by a to do list a mile long and what people expect of us. So with that said, join me for the month of July and see what changes I am making. Some changes will be with finances in mind, others will be my lifestyle. Stay tuned to find out more.

Tell me what you have done and that may inspire me to do the same. Make sure to subscribe to my newsletter so see everything.