Moving Forward Financially into the New Year

One of the few positive things to come out of the recession is that it’s forced people to take a long, hard look at their spending habits and keep tighter control over their finances.  Most families do have a certain amount of debt, with car, home, and education loans topping the list, but it’s important to keep your spending at a manageable level. Since there will be no money trees sprouting in our yards any time soon, we need to find better control over our finances.

Here are a few tips to follow in order to keep your financial well-being intact as you welcome in a new year:

Know what’s in your bank account(s). If you have no idea how much money you have, you have no idea how much you can spend.  If you have a bank account, you receive a statement each month, and with most financial institutions offering online banking, there’s no excuse not to know what’s in your bank accounts. Consolidate some of your accounts if it’s too difficult to keep track of them all. Read those statements and balance that checkbook every month to make sure the numbers work out.

Create budgets and stick to them. Once you know how much money you have, sit down and develop a budget. Factor in everything your family spends money on—not just the regular household expenses, but things like eating out, entertainment, gym memberships, and all of those other expenses that may not seem like much, but can quickly add up. Take a realistic look at each item and see what can be reduced or cut altogether. Ask for the kids’ input and make it a project so everyone understands how the family’s spending habits will change.

Don’t live off credit cards. One of the single worst things people do is pay expenses almost entirely with credit cards. Have a credit card for one or two big purchases and for emergencies, but don’t use it every time you make a purchase. Credit card interest rates show no mercy, so a small amount of debt can turn into a big problem in no time. 

Live at, or below, your means. “Bigger”, “better”, “faster”, and “more expensive” isn’t so trendy anymore.  “Practical”, “long-lasting”, and “affordable” are the buzzwords in this new economy. Look for second-hand or sales items, and shop around for deals.   

Pay bills on time. Carrying a balance is one of the easiest ways to accumulate debt. When developing a budget, factor in your household expenses first so your bill payments get top priority.  

New Year New Budget

Budgeting is not a once-and-done duty. In order for a budget to be successful, it needs to remain ever-revolving. As December quickly heads into a new year, it is the perfect time to review your budget and your savings goals. Getting passive about your budgeting system can also lead you to getting passive about your spending habits. Since January is a time of resolutions, make sure you resolve to review your financial status and begin improving it even more.

Remember the Golden Rule
One of the most golden rules in personal finance success is to spend less than you earn. In the past twelve months, there is a good possibility that your income has changed for the better or for the worse but you may not have adjusted your budget or your savings goals accordingly. Review your income and your expenses. Your regular financial obligations may have also changed in the course of a year. Sit down with a fresh notebook and refigure your finances.

Get Committed to Saving More
If you went through the past year but didn’t bank your work bonus or meet your previous savings goals, it is time to step up and make a bigger commitment. If you’ve been working on a budget, you are likely used to the guideline. Start analyzing the amount you have saved then make a list of the other things you should be saving for in your life. As a year passes, you are one step closer to retirement age or kids going to college. Re-evaluate goals based on the what happened in the past and what you are expecting in the future.

Re-Evaluate Your Expenses
At some point you may have had to cut back on certain expenses to make your budget work. Now that you have survived a year without some luxuries, you can likely try again to cut out some things you don’t need in order to save money you do need. Take a look at how expenses have changed. Note which services (cable, phone, etc) have gotten higher and start looking for better deals. Ditch memberships and other activities that charge a monthly fee if you haven’t used them throughout the past year.

Review Your Services
There are a lot of changes in many industries so there is good reason to review some of the services you are using like your bank, who may have raised or added fees to services that were once free. You may also want to consider refinancing loans, including your mortgage, if your credit has improved in the last twelve months. Many individuals just take for granted that they are using the same people for years at a time but never take advantage of the growing deals stemming from stiffer competition.

Get Everyone Back on Board
A new year means the family is a little older. Kids may be more understanding of their role in the family budget. Hold a little family meeting and go over the finances with everyone involved on a level at which they can grasp. Discuss family members savings wishes (vacations, new television, etc…) and involved everyone in the importance of sticking to a budget as a family.

Consumers Beware of Online Christmas Criminals

As holiday shoppers across the nation work on their shopping lists and prepare to dive into Black Friday deals, cyber-criminals are also getting prepared to take advantage of harried consumers who are more concerned with getting all the gifts than they are with their personal security. Online shoppers are at risk for losing money thanks to carefully masterminded plans of attack which allow them to gain access to personal, credit card, and banking information.

Here is a list of the top 6 scams of the online holiday shopping season:

The Invoice Fake-Out
This scam involves thieves sending fake invoices or package delivery confirmation emails that look like they are from major shipping agencies or the US Post Office. These emails will request that customers input credit card information or open an online account in order to get their package delivered properly. That information is then used to gain access to confidential account information and steal money or identities.

A Not-So-Merry Greeting Card
Emailed greeting cards are a popular way to share holiday thoughts with family and friends but criminals are using them to their own advantage. An email is generated and sent out that includes a link which contains malware. When the card recipients click on the link, they are putting themselves at risk. This is an especially tricky scam because so many people are trying to save money by cutting back on extras like greeting cards so it may be natural to think an ecard from Cousin Jean is perfectly reasonable.

Open Airwaves Are Dangerous
Hackers can tap into open WiFi networks or open public computers and steal the information they are able to view. When shopping online, make sure you make purchases from secure computers and secure sites.

Friendly Networking
Social media sites are a so popular these days, it can be easy to fall for a ‘friend request’ email that appear to be from one of the many well-known websites. The emails will request you click on a link to ‘accept’ the request but in doing so, malware can automatically be installed on your computer to steal your personal information.

Not-So-Jolly Holiday Sites
Criminals will often create websites that appear to be selling special holiday-themed products such as ringtones or screensavers. When you purchase and download the files, your computer can be infected with malware or other dangerous programs that can steal your personal information or crash your computer.

Banking Heists
While this scam happens at all times of the year, the holidays are an especially vulnerable time to perform this maneuver. An email is sent out that looks officially like something your bank would send to customers. However, the email instructs readers to enter personal banking information in order to confirm their account, otherwise the account will no longer be accessible. This kind of email can scare consumers into doing as they are told for fear of not being able to access money during the holidays. Remember that no legitimate bank or business will ever ask you to submit confidential information via an email. If you are unsure, contact your bank directly. 

Here is a quick reference list of how to protect yourself online during the holidays and at any time:

• Never click on an links in an email. Contact the company directly if an email is asking for information.
• Use your head and remember the old saying ‘if it looks too good to be true, it probably is”.
• Update your security software on your computer frequently so you are fully protected at all times.
• Shop only on websites and networks that are secured. If you have a WiFi network, be sure to password-protect it.
• Change passwords and make them strong. Don’t use obvious words to create passwords. Instead use a combination of numbers, letter, and symbols to secure your information.
    

Padding Your Bank Account Can Save Hundreds of Dollars

With all of the chaos we deal with in life, it’s no wonder that consumers find themselves being hit with more and more fees due often to simple oversight. Missing a checkbook deduction or paying bills late result in high fees and overdraft charges. Occasionally, one mistake can lead to a domino effect that can add up to hundreds of dollars.

So what can you to do to ensure this doesn’t keep happening? First of all, try automating your bills directly from your bank account. Bills will be paid on time, every time which reduces the risks of bad credit and keeps more money in your own wallet. But what if you are living paycheck to paycheck?

So many families are working hard to make ends meet and find they still come up short in the personal finance department. Many will not be able to automate their bill paying because of the lack of money. However, making strides to change your savings plan can help you get better in your overall financial situation. By padding your checking account, you can virtually rest assured that you will never pay a late fee or a bounced check fee again.

Here’s how:

A Little Pad Goes a Long Way
Padding an account simply means you are adding extra money to your account but not necessarily accounting for it. For instance, if you have $300 in your account on a good week when nothing else is to be paid out, you can rewrite your checkbook ledger to reflect that you only have $100- thus ‘padding’ your account by $200. Mentally, you may know that you still have that extra $200 but over time you may come to forget the pad. Some people will even go so far as writing themselves a check for the pad money but not cashing it – just to keep the checkbook straight.

Keep Padding
If you are struggling now to get by and can’t imagine having any kind of padding in your account, just start with smaller financial goals. Start with an extra $25 in your account that you do not spend. Overtime, you can add and pad a little more money until your ultimate goal is reached.

How Much Is Enough?
Any extra amount is a good start but even a $500 cushion can help prevent overdraft fees and NSF charges. Keep going with your padding as long as you can and don’t consider it a rainy day fund or a savings account. In fact, for all intents and purposes it is better to essentially forget about it.

Other Uses
While the money you are using to pad your account against accounting errors shouldn’t be used for frivolous purposes, you could effectively withdraw from it in the event of a real emergency such as medical expenses, car repairs, or home repairs. However, if you use the money that is padding your account, you must commit to yourself that you will put back the pad money and work towards establishing just as significant savings account for rainy days and other goals