Personal Finance Gifts for the New Graduate

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College graduation season is upon us. How about a gift that will really mean something to a student in your life?

The best graduation gift may not be just a check in an envelope – it’s coming up with a few great, memorable ideas to help a new grad get a great financial start in life. At a time when money skills for young adults have never been more important, consider the following:

Buy them a session (or more) with a money coach. If you already work with a qualified financial planner or professional tax preparer, why not pay for a session or two for the new grad to help them work out their first budget as a working adult? Take the time to talk with the professional about specific financial issues the grad will need to address as well as their first, formal budget setup if they’ve never budgeted before.

Help them get a start on their retirement savings. Again, most of these gift ideas can come from one person or a group throwing in cash contributions. Consider taking your new grad out to open a Roth IRA (https://www.irs.gov/Retirement-Plans/Roth-IRAs) or Traditional IRA (https://www.irs.gov/Retirement-Plans/Traditional-IRAs). Early retirement investing is one of the most important lessons any new college grad can learn.

If they’re continuing school, create a 529 plan or contribute to an existing one. Many new college graduates return to school to start a master’s degree or other advanced training. If such an idea makes sense for your finances, consider opening or contributing to a 529 college savings plan (https://www.irs.gov/uac/529-Plans:-Questions-and-Answers) to support their continuing education. A 529 plan is a college savings plan set up by a state or educational institution that offers tax advantages and potentially other incentives to make it easier to save for college and other post-secondary training for a designated beneficiary, such as a child or grandchild. A friend or a relative can set one up and name anyone as a beneficiary – the new grad, another relative, even yourself – and there are no income restrictions on doing so. You’ll also be free to change the beneficiary if necessary. One suggestion – before you act, talk it over with the new grad or his or her family members to make sure this is the best approach for helping with their future education.

If your new grad loves a company, consider buying them a few shares. Again, evaluate this decision against your own finances and parental opinion, but if there is a particular company the new grad has bought merchandise from or otherwise has taken a great interest in, consider going with them to a brokerage to buy a few shares in the company. Make it a lesson not only in the purchase process, but in the valuation, tax and ownership issues anyone has to deal with as a long-term shareholder. Even though he or she will probably own more investments in mutual funds over a lifetime, understanding the ownership of individual stocks will inform all the investing they do.

Bottom line: Money issues can be daunting for today’s new graduate. Why not disarm their concerns with some solid advice from experts you trust? By offering up basics in budgeting, saving and investing, you just might become one of their favorites.

 

By Nathaniel Sillin

3 Financial Tips That Will Lead to a Better Mortgage

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Buying a house is one of the most exciting (and nerve-racking) times in a person’s life. As you begin reviewing the inventory that is available in your local towns, you’ll want to take several pro-active steps to ensure that securing a mortgage is as easy as possible when the time comes to bid.

Since you’ll be dealing with what seems to be mountains of legal paperwork, the stress of selling off any old properties you have, and literally scouring each bank account you own for every piece of usable savings, it is important to have a clearly organized path towards successfully obtaining a mortgage neatly laid out in front of you.

It is in that light that experts suggest focusing on the following 4 tips as you prepare to formally buy a house

  1. Clean up Your Financial Life– The first step towards successfully securing a mortgage is to make sure that your (and your fiancée’s!) personal expenses are in proper order. Look into every credit card and recurring bill to make sure there are no large outstanding balances. Double check that your accounts are all in good standing and that you are up to date on your taxes. Most importantly, make sure that there are no unusually large deposits in the bank account you plan on leveraging for your down payment within at least 3 months of your planned bidding date; loan advisers will not only want to see your detailed bank account history, you’ll have to formally explain every non-recurring paycheck deposit of over a $1,000. Simply put- they’ll want to make sure you aren’t relying on non-maintainable means for your home like a family loan.
  1. Get Pre-Approved– Becoming pre-approved adds a certain level of “seriousness” to your bidding ability. Sellers will be much more inclined to accept an offer from a pre-approved buyer because there’s significantly less uncertainty as to whether they can afford to purchase the house. From a buyer’s point of view, providing the necessary tax returns, bank statements, and paycheck stubs to get pre-approved early in the process will only save you valuable time on the back end; there’s no need to over-complicate the closing with unforeseen financial issues that can stop you from receiving your mortgage in the “25th
  1. Be Smart About Closing Costs– Most people totally forget about closing costs when it comes to planning out the percentage they want to establish as their down payment. Deposits, attorney and agency fees, inspector invoices, etc. all need to be accounted for to ensure a smooth transaction. There are so many things that can slow or completely halt a closing process. Make sure you’re financially equipped.

Scammers Deliver Malware Using Fake FedEx Message

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FedEx customers are the latest targets of phishing by cyber criminals. Comodo Threat Research discovered an email message making its way around with a malicious document claiming to be from the package delivery company. If the included attachment is opened, malware is delivered to your computer instead of a package to your door.

It isn’t the first time FedEx and UPS have been used to deliver malware. The ICE trojan appeared a while back using a similar tactic. However, FedEx wrote in a statement that it does not send unsolicited email messages to customers requesting package details, account numbers, invoice information, passwords, or personal information. It’s good practice not to open attachments in any email messages unless you are without a doubt certain they are not malicious.

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In this scheme, the email is targeting both English and Italian speaking customers. Apparently great care has been put in place to ensure the phishing attempts are difficult to spot. The logos and coloring appear to be very well done, but there do appear to be some syntax errors in the written message. Always watch for clues such as these to identify if phishing may be in play. Also for this case, the message states a package is to be delivered but the recipient was not home. It asks for the attachment to be printed and taken to the FedEx location to retrieve it.

Rather than click on any attachments or links, go directly to your FedEx account or contact the company via phone to find out if there is indeed a package scheduled to be delivered to you.

Fortunately, this malware appears not to contain ransomware, but it is designed to corrupt computers. So while you’re ensuring all your anti-malware and other software is updated, make a backup of your important files too. This is a great way to avoid stress should something unwanted get delivered to your systems.

© Copyright 2016 Stickley on Security

Working Out on a Budget

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It’s true–good health really does save money.

A Towers Watson survey (https://www.towerswatson.com/en-US/Press/2012/11/research-shows-prevention-is-key-to-reducing-health-care-costs-for-all-employees) noted that employee wellness programs saved employers an average of $100 in health care costs per worker. So if you’re going to get healthy, do it the smart way and make well-researched spending decisions throughout the year. Here are a few tips at the starting line.

Do a little heavy lifting with your budget first. Whatever your goals, check your overall finances to see what bad health behaviors might be costing you now in terms of immediate everyday costs or long-term impact on medical bills. You might find that a successful fitness plan can return hundreds of dollars–and possibly thousands–to your budget.

Pick a workout you like. If you loved swimming or jogging as a kid, such sports might be a good place to restart your fitness regimen. Restart your fitness habits modestly but consistently with activities you like. If they require a facility, test it out for a few days to comparison-shop. If they’re offering specials, read the fine print carefully and try to stay away from long-term membership commitments if you can.

Don’t overlook your community. Check out taxpayer-supported facilities and activities you’re already paying for in your community to see what they offer. Community centers are great resources for inexpensive or free classes. You might be surprised how many free public tennis courts, swimming facilities and other recreational spaces are available in your city or town. Also take advantage of any regional, state or national parks that are near you. There’s no greater motivation to stay active than getting outside.

Find buddies. You’ve seen them when walking or driving past a park or other locations around town–people who run together, walk together or dance together. Joining a fitness group doesn’t have to cost any money at all; you might make new friends and you’ll hopefully challenge and keep each other motivated.

You don’t need all the latest gear. Unless you need specific clothes or equipment for protection or safety, raid your closet to save on your fitness plan. Keep it cheap and focus on improving your health. Consider setting workout milestones and reward yourself with a new purchase after hitting your goals.

Adjust your commute. If you have access to public transportation, take the bus or train more often–you’ll automatically walk more to and from your destinations. If you do drive, park at the farthest end of the lot to add a short, cost-free workout into your daily schedule.

Prepare your own meals. Working out is important to getting healthy, but eating properly can help you achieve results faster. One of the most effective ways to improve a diet–and save money while doing it–is resolving to prepare more meals at home (http://www.practicalmoneyskills.com/calculators/lunch/). Also, commit to selecting more healthful options whether you are at home or dining out. There are almost limitless resources in libraries and online to learn about quick, healthy food preparation and smart food shopping.

Bottom line: Working out on a budget doesn’t always require added expenses. There are many inexpensive or free options to meet both health and financial goals in your neighborhood, at work and many other places.

 

By Nathaniel Sillin

3 Ways to Profit from Spring Cleaning

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It’s an American tradition; every year as the weather warms back up, we get restless and start opening windows, cleaning out the house, and setting things aside we no longer want/need. While it’s always a shame to just throw out the things we once held dear to us, many people opt for this action since it is both the quickest and easiest thing to do with all of this “stuff.” Well before you load up the car or your curb, experts suggest weighing a few other options that can actually net you and your family some extra cash. Here are three ways to turn this year’s Spring Cleaning into a profitable ordeal:

1. It’s Time to Sell!–Ever hear the old adage that “one man’s trash is another man’s treasure?” Well, in today’s digital world, there are tons of ways to capitalize on this fact and sell your old valuables. Long gone are the days where a family had to rely on a neighborhood wide garage sale or a local flea market to reach potential “customers.” Now, we’ve got eBay, Craigslist, and Etsy; there are even Facebook Garage Sale Groups you can join! While it may cost money in certain situations to post your goods, you should absolutely leverage these vendors to extend your reach, especially on larger or harder to sell items. People often foolishly think that selling items in this manner will just provide you with a “few extra drops in the bucket,” as opposed to a nice flow of cash; while you certainly shouldn’t rely on these sales as solid income, you also should not underestimate the nice chunk of change they can often provide.

2. Donating Helps Everyone–Not only does it feel great to help those in need; donating your old clothes, electronics, and other goods can actually provide you with excellent write-offs come tax season. So when it comes to ridding your home of your past valuables, make sure you reach out to both your local and national charities of choice to coordinate a pick up/drop off. Big Brothers Big Sisters, Lupus, and many others do full neighborhood sweeps where all you have to do is leave your donation clearly marked outside your door on the pre-set date; just make sure you follow through in collecting the necessary receipt documentation that can serve as proof of your donation if you are ever audited. Your tax specialist should be able to not only find you valuable deductions for tangible goods you’ve provided to others, but monetary donations too!

3. Trade and Upgrade–If you don’t have the time to sell your old goodies, and want a little more in return than tax incentives, you should look into what trade-in options you may have available to you. Did you know that major retailers like Best Buy actually have retail-collection programs that offer gift cards for trade-in’s on electronics and appliances? Additionally, sites like Gazelle.com offer Paypal and Amazon gift cards when you trade in your outdated cell phone or tablet. See which retailers/vendors offer you the best trade options, and leverage these scenarios to upgrade your home through new items purchased with these rewards certificates, gift cards, and credits. Remember, your flip phone from college might seem useless to you now that you have an iPhone 6, but that doesn’t mean you can’t get something out of it towards a future purchase.

When Changing Jobs, Should You Leave 401(k) Money Behind?

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With the average American spending only 4.6 years at any given job, it’s never been more important to have a plan for any retirement funds you’ve accrued at any employer.

A big problem that began during the 2008 recession but continues today involves loans, hardship withdrawals and complete cash-outs of 401(k) plans. A 2015 Boston College study (http://crr.bc.edu) reported that 1.5 percent of retirement assets “leak out” of 401(k) plans and personal IRAs each year, reducing an individual’s wealth at retirement by about 25 percent.

Meanwhile, a 2014 Fidelity Investments study sounded a particularly urgent alarm about 401(k) cash-outs and workers under the age of 40. The mutual fund giant noted that 35 percent of all participants were simply cashing out their 401(k) assets when leaving a job. However, for workers aged 20-39 – indeed, those with the longest savings horizons – that number jumped to 41 percent.

So what should you do? A great deal depends on your age, time to retirement and specific needs.

Start by taking an inventory of your retirement assets. Either alone or with the help of a qualified financial or tax expert, put together an official list of current and former 401(k) plans, personal IRAs or, depending on your years of work history, assets from traditional defined benefit retirement plans that were popular more than 20 years ago. Then see where you are.

Make sure you always review retirement options whenever you change a job. If an employer is highly motivated to get you on board, query the company about the retirement savings options that would fit the position you’re interviewing for. Ask hiring managers in general terms about how well their retirement options have performed and if you would have the option of rolling over your 401(k) assets to that employer. If, for example, your prospective employer has a more generous matching feature than your current employer has, that could create a favorable environment for transferring those assets. If not, you may want to keep your money in your employer’s existing plan or consider a rollover to a personal IRA with the features you’re looking for. Ask plenty of questions.

Evaluate IRA choices carefully. If you are considering rolling your former employer’s assets into a personal IRA, evaluate your tax situation, both Traditional and Roth IRA options and their performance and fee levels before you arrange for a transfer.

Go for the best-performing investment options that fit your needs and anticipated retirement date. Employer-based 401(k) plans generally disclose investment choices and investment fees (http://www.dol.gov/ebsa/publications/401k_employee.html). It may be a good idea to get qualified help to review those documents. Age is important. There’s typically a 10 percent penalty if you withdraw money from a 401(k) or IRA before age 59 ½. But if you lose or leave your job at age 55 or later (or earlier for certain public employees), you can generally take 401(k) withdrawals without penalty. An IRA rollover requires the account holder to be at least 59 ½ years old before they can take a penalty-free IRA distribution. While keeping your money invested as long as possible is key to a successful retirement, withdrawal issues are also important to consider based on your age and time to retirement.

Invest on your own. It’s important to do parallel personal retirement planning with any employer-based retirement options available to you. Again, get qualified help to assist you in evaluating the retirement savings and investment decisions you make on your own and at work.

Bottom line: Frequent job changing can derail anyone’s retirement planning. Whether you roll over a former employer’s retirement assets every time you switch or decide to keep your money in certain plans, get help if you need it.

 

By Nathaniel Sillin