Wisdom With A Windfall

Sometimes, life grants sudden windfalls. One would assume a windfall would help relieve financial stress, but often they can lead to a different kind of stress. Big decisions need to be made regarding what to do with a financial boon, and making those decisions can come with its own complications. Some windfalls may come with complicated emotions if it comes from the loss of a loved one or a relationship dissolution. Read on for helpful tips to handle a windfall with wisdom

 

Take A Break

Don’t make hasty decisions. Give yourself some breathing room and put the money aside while dealing with any emotions tied to the money. Decisions don’t need to be, nor should they be made in an emotionally heightened state. There’s no set time limit to wait, but waiting at least a few months isn’t bad advice. Keep living within your means and avoid excess until you get your financial house in order.

 

Keep The Money Safe

Depending on where your windfall is coming from, you may be able to keep the money in the account it’s already in, like with a life insurance benefit. You can set up a savings account to hold your funds while you make decisions.

 

Meet With A Tax Professional

Consult a professional about taxes pertaining to your windfall. Life insurance benefits are generally tax-free, but other windfalls may require payment of taxes to the government.

 

Get A Financial Advisor

Depending on the size of your windfall, you will want to meet with someone who can help guide you in the best ways to manage or invest your money.

 

Prioritize

Before you start spending on the wants, make sure your needs are met. If you’ve struggled to save for retirement, think about investing in an IRA-Roth fund to secure you’re future. Pay off debts, create a cushy emergency fund.

 

Have Fun

Buy a few of your wants. There is no need to blow your windfall all at once. If you invest well, you can live off the interest alone as your wealth accumulates. But make sure you splurge a little and enjoy it. Set an amount you are willing to spend and stick to that budgeted amount.

Teaching Teens Financial Literacy

While financial literacy is a life-long endeavor, the basics are best taught before high school graduation. Books are a great resource to help your young adult, but the conversations you have with them will last longer. Here’s our must-view key topics for starting these conversations.

 

  1. Budgeting

Teens must know how to create a budget, from the time they start earning an allowance or get their first after-school job. They should know the budgeting basics, income, expenses, savings.

 

  1. Credit Cards

Discuss credit and credit cards before your teen hits 18. They’ll be inundated with offers for credit cards and need to know how it works. Interest rates, payment periods, building credit.

 

  1. Bank Accounts

Help your teen set up their bank account and explain fees, different types of accounts, minimum balances, interest rates for different savings accounts. Make sure your teens knows how to write a check. They may one day be completely obsolete, but knowing how to find their routing number and account number on a check can be a life saver.

 

  1. Savings

Teens should know the value of a dollar, especially if you’re the one who is footing the bill. Emergency savings, nest egg, repairs, healthcare costs all need to be factored in when learning to save. And it’s never too soon to start planning for retirement.

 

  1. Credit Scores

Young adults need to know the importance of credit scores and how mistakes now can affect them for years to come. Wise choices with credit building can ensure they are able to purchase a car or a home one day. Ensure they understand the impact that missed payments can have on their credit as well.

 

By having these conversations with your teen early and often, you’ll lay the foundation for their financial security that will last a lifetime. They’ll be more open to coming to you for advice if they know you know your stuff too!

 

Check Your Money Mindset

Dave Ramsey, personal finance guru, emphasized the importance of the Money Mindset and how it can reshape your attitude towards your finances. But what is the ideal Money Mindset? We’re going to break it down for you today!

 

Money Mindset is what you believe about yourself, money and how you and your money work in the world around you. The Money Mindset is all about your every day choices that shape your financial future. Sticking to a budget is a choice. Going on a shopping spree is a choice. These choices affect what happens at the end of the month when bills are due. The habits, formed by repetitive choices, affect what happens in 3 months, 6 months, a year, 5 years and on and on. If you find yourself short every month, living paycheck-to-paycheck, it’s time to check your money mindset and shift some of those beliefs and habits. The only person who can change your relationship with money, is you. Your mom can’t nag you into financial responsibility. Your partner can’t make you care about your finances. Only you can change your attitude and your situation.

 

Healthy Attitudes

Healthy attitudes towards money can drive your decisions, savings habits, spending habits and more. People with a healthy relationship with money believe that they are in control and have the freedom to choose to save or spend. They believe in giving responsibly, and when able, generously. They do not compare themselves to others and don’t try to keep up with The Jones’. They believe they can achieve their financial goals, and they set those goals.

 

The Beginning

Your attitudes about money are generally shaped by what you are exposed to growing up.  If your parents talked about money openly, you’ll be more inclined to be open with communicating about money too. If they struggled and spent money like it was going out of style, you may be inclined to overspend as well, or you may sway the other way and pinch every penny. Think about what was modeled to you and examine where you can work on shifting some beliefs.

 

Why It’s Important

Knowing what your money mindset is helps you on your financial journey by highlighting areas that need improvement. Every single person has areas of improvement to work on. Money and attitude is no different. By knowing what your attitudes and biases are, you can be mindful of them when it comes to financial habits and more easily adjust as you go.

 

How To Change Your Money Mindset

Educate yourself. Read personal finance books and blogs. Listen to podcasts, watch TedTalks and find a financial whiz to follow on YouTube. Find a role model and start listening to how they did it. Find your inspiration and put in the work to get to where you want to be. If you’ve got a mental block, start by writing about what you know, your current financial situation. Write about what you saw regarding money in your family. Write about your current financial habits and what habits you would like to have. Start setting goals, small ones at first. Then work your way up. Start with baby steps and go from there!

Getting Ahead in 5 Easy Steps

If you’ve gained control of your budget and sticking to it, it’s time to start thinking ahead and building your wealth. To get ahead and stay there, follow these easy steps!

 

  1. Max Your 401k contributions

If you’re not maxing out your 401k contributions, you’re losing money. Now, not everyone works a regular 9-5 with 401k options, so this may not seem fair to small business owners or entrepreneurs. If you are your own boss, open a tax deferred account or IRA Roth and contribute 15% of your take home. By maxing out your contributions to these types of accounts and leave them alone, you set yourself up for comfort with 6-7 figure savings.

 

  1. Become A Homeowner

No matter how old you are, the best thing you can do for yourself is to buy a modest home as soon as possible and get out of the renting world. Save up a 20% deposit and get your credit to 700 for the lowest payments possible. In a lot of areas of the country, your mortgage payment can be half of what rent is in the same area would cost. Keep your eye on the housing market and buy when housing prices are low, and if a housing market bubble starts up, sell high. This will get you into position invest in your forever home once you’re ready to really settle down.

 

  1. Educate Yourself

Learn how about the stock market and start a portfolio. Wealthy people can live off the interest from their portfolios alone, while amassing their wealth for future generations. Keep up to date on what’s going on in the finance world and diversify your stocks.

 

  1. Negotiate Your Salary

Ask for what you are worth. Learn to sell yourself and your accomplishments and use them to gain ground each year on your salary.

 

  1. Goals

Set financial goals and take the steps to meet those goals. Give yourself benchmarks along the way. Set time frames for when you want to pay off your student loans, your home, your car. Work your budget, work hard and free up those payments to pay yourself!

Easy Steps To Repair Your Credit Score

If you’re planning to make a big purchase in the future, like a new car or buying your first home, you’ll know that credit has a massive impact on your purchasing power. If your credit score is lower that the high 600s, it’s time to start working on repairing your credit now! You’ll get better interest rates and approved for higher loans too!

 

  1. Get Your Credit Report

Your first step will be getting ahold of your credit report. There are many sites that will give you a free credit check without it affecting your credit, known as a soft inquiry. By law, each of the three major credit bureaus are required to give you a free credit check every year. If you space them out, you can check your credit every 4 months. Your credit report will show your credit history, open and closed accounts, loans and legal actions like foreclosures or bankruptcies.

 

  1. Check For Errors

Review each credit report for errors. Even small errors can benefit you. Check for spelling errors, addresses, accounts that aren’t yours, inaccurate or incorrect inquiries and fraudulent activity. If an error appears on one credit report, check with the other two credit bureaus immediately to see if the error appears on all three.

 

 

  1. Dispute

Contact the reporting bureau immediately to dispute errors. This can sometimes eliminate or resolve the debt immediately. There are very strict stipulations a creditor must follow to report your debts. The credit bureaus are legally obligated to quickly resolve any errors. You can also reach out to the lender or creditor to fix the errors on their end, especially if your account is in good standing for repayment.

 

  1. Pay Up

Pay your late and past due accounts. Catching up and keeping your accounts in good standing is important to your credit health. Until a payment is over 30 days past due, it isn’t reported to the credit bureaus. Budget wisely and quickly if you begin to fall behind. This will also keep your accounts out of collections, which can hit your credit score even harder.

 

  1. Pay-For-Delete

When negotiating payments with a creditor, always request a pay-for-delete letter so that the account will be removed from your credit upon your final payment. This works for accounts you’ve negotiated for lower amounts too.

 

  1. Build Credit

Once you’ve lowered your debt, it’s time to start building more positive credit. If your credit score is poor, opt for a secured credit card and pay it on time every month. This can build your credit quickly and easily. With positive credit history, you show lenders that you are a responsible borrower, increasing your chances of getting approval for that big ticket purchase.

Negotiating Debt

No one wants to dodge calls from debt collectors. Maybe you break out in a sweat when the phone rings. Perhaps you’ve learned to just send all unknown calls to voicemail. But at the end of the day, you still have debt, even if you’re not dealing with it. We’ve got a great guide on how to deal with debt collectors that’ll take the anxiety out of those calls and help you get your debt under control.

 

Stick To The Script

Be honest if you’ve faced hardship that has made making your payments difficult. If there’s been an illness or loss of income, let them know.

 

Avoid the Theatrics

Stay calm no matter what the debt collector says. Don’t lose your temper, don’t panic. If you do become overwhelmed, tell them you’ll have to tlak to them at another time and hang up. You can tell the debt collector that you’d like the conversation to be recorded and this will usually keep them on their best behavior.

 

Ask Questions

If the debt collector says you’ll be sued or have property taken, ask questions. Many of these threats are illegal. Know your rights. The more information you have, the better equipped you’ll be to handle the situation.

 

Take Notes

Write down all information passed on to you. Include their name, company, title and what has been discussed. You’ll have a record of what went on, and if the collector broke any laws, you’ll have that on hand too.

 

Know What’s In The Budget

Figure out what you can afford. Offering a lump sum can drop what’s owed, sometimes as much as %70. Since debt collectors buy debt for pennies on the dollar, they still make a profit on collecting even deeply reduced debts. By negotiating, you may even be able to afford to pay off one or two debts a month and swiftly eradicate this source of financial stress.

 

Deal with Creditors before Collectors

If you owe, speak to your creditors before your account goes to collections. Ask for a payment plan and stick to it, even if it’s only $20 a month. Once an account is in collections, it can damage your credit worse than just falling behind with a creditor.

 

Get Proof

If you’ve agreed to a payment arrangement, ask for it in writing before sending them a penny. This way terms cannot be changed on you and you won’t get hit with surprise charges.

 

Derogatory Remarks

When paying off debt, request that companies remove derogatory remarks upon payment in full. If a creditor won’t remove the mark, it could stay on your credit for up to seven years.

 

Get Help

If you are struggling with multiple creditors or debt collections, reach out to a credit counselor or debt consolidation professional to see if their services could help you.