Tag: Financial planning

Financial Spring Cleaning

Published on by CarrieLeave a comment

With Spring finally here, many people are thinking about Spring Cleaning. For many, it is a time to tidy and organize around us so that we can focus on all the new things that Spring brings. That could involve cleaning out your closet, organizing your shed, or anything else that makes you feel ready for the coming season. This spring, consider doing some Financial Spring Cleaning! It is a great way to make sure that you and your money are ready for the year ahead. Here are some Financial Spring Cleaning suggestions: 

1. Check your credit report. 

Checking your credit report is a quick and easy way to protect your identity and review your financial picture. If you go to https://www.annualcreditreport.com, you can request a copy of your credit report from each of the 3 credit bureaus (Equifax, Experian, and Transunion). Once you have it, you want to review it to make sure all the information shown on the report is accurate! The Consumer Financial Protection Bureau has a great tool that walks you through the process for checking the accuracy of your credit report, you can find it here: https://files.consumerfinance.gov/f/documents/cfpb_your-money-your-goals_review-credit-report_tool.pdf

2. Have your tax paperwork ready to go. 

Remember that the deadline to file taxes is April 15! To be ready, gather all the documents you need and put them in a safe place. You don’t want to wait too long to get started on your taxes. Many of us hope to receive a refund, but if you do end up owing taxes you want to make sure you have the time you need to figure out a plan to pay that bill. You should also keep in mind that appointments with a professional can fill up quickly and even filing online with tax software can take longer than expected. But if you are ready well in advance, you can file your taxes on time and move on with your spring!

3. Review your spending habits. 

It’s always important to know where our money is going. One way to be more in touch with your spending habits is to look at bank records or credit card statements for January and February. You could go over them generally to see where you are spending money. You could also put expenses into specific categories and add them up to see how much you are spending each month on bills, groceries, going out to eat, or other categories. This is important because we often underestimate our spending and it can make budgeting very challenging! If you review your spending regularly, then you should have a much clearer idea of your spending habits. 

4. Consider creating a chart or visual for an important part of your financial life.

If you want to take reviewing your habits a step further, then consider creating a way to visualize some part of your financial life. One example is creating a bill calendar. You can use a generic calendar (as in one that is not for a specific month) to show the dates your major bills are due. That way you have a quick way to know which bills need to be paid on what dates. Another option is to create a picture of your debt. This could be a chart that shows student loans, car loans, credit cards, or other debts and their overall balance. It can be especially useful if you are working on paying down your debt!

5. Create financial goals. 

Finally, prepare for the season ahead by creating financial goals! Having a clear picture in your mind of what you want to do with your money can help you make financial decisions in the future. For example, it might help to carry a written reminder of your financial goals. If you are getting ready to make a purchase, seeing that written reminder could encourage you not to make the purchase and keep saving or to more deeply consider whether the purchase is necessary. The reminder is helpful because it changes your way of thinking. It helps you keep in mind that you are saying no to purchasing something right now so that, in the future, you are able to achieve an important financial goal! 

Wishing all of you a happy Spring!

Living Well

Published on by umdextensionLeave a comment

March is Living Well Month! The National Extension Association of Family and Consumer Sciences (NEAFCS) encourages families to live well through raising kids, eating right, and spending smart.

Physically, mentally, socially, and emotionally strong families provide strength for future
generations and Extension initiatives enable Maryland residents to build the knowledge and skill to lead full and productive lives.

The University of Maryland Extension Family & Consumer Sciences team provides comprehensive education for individuals in a variety of areas including nutrition, physical activity, mental health, chronic disease prevention and management, personal finance, and so much more.

Celebrate healthy living and the great work FCS professionals do to educate individuals, families, and communities in Maryland, and across the country, by engaging in one of the Living Well Month activities!

Follow the recommendations of the NEAFCS, or come up with some of your own goals to start Living Well!

Savings Goals for the New Year

Published on by Carrie1 Comment

Each January we get a powerful fresh start in the form of a new year. That clean slate for the year ahead encourages us to set goals, try new things, and improve our habits for the year ahead. Often fitness and health goals get all the attention. Our friends are on social media sharing their new eating plan or marathon training schedule. Health goals are important, but financial goals can be just as important for overall wellness! As we head into 2023, why not try out some savings goals and shift some focus to your financial health?

Changing our behavior is always a challenge. In many ways, our brains aren’t wired to give up the things we want now for something we might be able to have in the future. And as our goals get bigger and further in the future, this gets more and more difficult. We might really want to pay off our car loan or student loan, but those things can take small amounts of money over many years. Spending that money on things we enjoy now would definitely be more fun and using that money to pay down debt can feel pretty anticlimactic.

One strategy for improving our motivation is to create a vision board. Ideally, this vision board would focus on a specific large financial goal. It would include pictures that show:

  • How it would feel to achieve the goal
  • What you would be able to do when you achieve the goal
  • The kinds of characteristics you will have when you achieve the goal

Looking at the vision board reminds us that the goal is important, possible, and that achieving it will change our lives for the better! It helps us visualize that when we say no to something right now, it is because we want to be able to say yes to something else in the future. I made one recently and hung it where I would see it each morning. It was focused on a dream I have always had to travel. After 5 years of saving, my husband and I took the trip I had always dreamed of last summer! I’m looking forward to making a new one for this year because the previous one was such a great source of motivation.

I tried to find my old vision board and include a picture here, but we moved recently and I can’t find it! So instead, here is a picture of my husband and I in Venice, Italy after saving for 5 years to make this trip!

The vision board is an excellent tool for motivation, but it needs to be paired with strategies you can actually use to save the money. One option is to start small because it gives you the chance to create a new habit without having to stick with any really major changes. For example, my bank allows me to use rounding up to increase my savings. With rounding up, each of my purchases is rounded up to the nearest dollar and the rounded-up amount is placed in my savings account. For example, if I bought dinner and it was 19.20 then my bank would round that charge up to 20.00. Of that, 19.20 would go to the restaurant and 0.80 would go into my savings account. The amounts are small, but they add up over time!

If you’re looking to save in larger amounts, it might be good to look into your bank’s options on savings accounts. At my bank, it doesn’t cost me anything to open an additional savings account and I can do it from right within their app. Once I have the account, I can add a label to it. I usually label my accounts with what I want to do with the money in the account. An example would be an account labeled “Emergency Fund” where I save for emergencies, or “Summer Vacation” where I save to take a trip with my family over the summer. Some banks even let you set a goal for your account and give you a status bar showing how much progress you have made toward your savings goal.

Things like this can really help with motivation! It seems simple, but adding these labels can be a powerful way to change the way our brain thinks about money. If I am running short and need to move some money from savings to make a purchase, seeing that label makes me stop and think. Is it really worth it to me to take money from my summer vacation to buy this other thing? Sometimes it’s groceries or an important bill, and the answer is yes. But other times I realize I’d much rather go on vacation than buy whatever it is I’m considering.

These small changes can add up to some major savings over the course of a year. They can help you establish an emergency fund and save for future needs (and wants). Hopefully you try out some savings goals or other financial goals this year! Drop a comment and let us know, do you have a savings goal for 2023? Are there any strategies you use that work for you?

Fall is For FAFSA

Published on by DorothyLeave a comment

October 1 of each year marks the date that the FAFSA (Free Application for Federal Student Aid) becomes available. Students who wish to receive any form of student loan or grant from the federal government must complete and submit it. Most states and colleges also require completion before schools offering aid and formulating a financial aid package.  Even some scholarship foundations and other private grantees will ask for the FAFSA.  

The financial aid process can feel somewhat mysterious for both students and their families.  The first step is to complete the form.  It is available on the StudentAid.Gov website and can be submitted online or mailed.  If sent in electronically, the Department of Education processes your application in about three days, and then makes the information available to all of the schools you chose to list on the form.  Each school then uses the information you documented on the FAFSA to determine how much aid you are eligible to receive if you attend that school. Aid can be a combination of subsidized loans, unsubsidized loans, grants, and scholarships. 

To determine a student’s financial package, the financial aid office evaluates a complex formula.  The parts of the formula are the cost of attendance (COA) and an Expected Family Contribution (EFC). The outcome of this formula will determine the amount and mix of student financial aid. 

Cost of Attendance. The COA takes into account the variety of costs that the student will incur in order to reasonably complete their education.  This calculation includes tuition and fees, living expenses such as lodging and food, books and related resources, dependent care expenses if the student is a caregiver, travel to and from the school, costs of disability accommodation, and reasonable study abroad costs if applicable.  

Expected Family Contribution. The EFT is the portion of costs that the student and family are expected to pay toward the cost of attendance.  The EFT is also a formula, and factors in the size of the student’s family, the number of students attending higher education (for now), most forms of income, and certain assets. Whether home equity is considered or not can depend on requirements of some private institutions. 

Be careful with deadlines.  While the FAFSA can be completed and submitted any time between October 1 and June 30, many schools have earlier deadlines, especially for specific scholarships and grants.  Additionally, even some federal grants are available on a first-come-first-served basis, and the opportunity for those funds can close once the budget is used. 

Next year, there will be many changes happening to the FAFSA application.  These changes will not be in effect until the 2023-2024 application period, but they will be discussed in an upcoming post so families can plan accordingly. 

Auto Insurance 101

Published on by JesseLeave a comment

While many of us drive a car, most of us have no understanding of our auto insurance policy. What do the numbers mean like 50/100/25 coverage? How often should I compare rates with other insurance companies? Or, understand terms like liability, collision, bodily injury, etc. I guess we will call this auto insurance 101.

Let’s start with when you need to get insurance. You can buy a car, new or used without purchasing insurance, unless you are borrowing/financing the car. It is when you request a license plate that you are required to show proof of insurance. For most of us that happens simultaneously with buying the car. The requirement is actually proof of liability coverage as needed for registration, which is covered under what is called compulsory automobile coverage. Liability is when you are held responsible for the damage to another or their property. 

50/100/25???? These are simple numbers to explain how you are covered by your insurance policy. It falls into three categories: per person, all persons, and property for each accident. The 50 actually means that each individual is covered up to $50,000 per person in an accident; 100 is $100,000 in payments to all persons in an accident – this is also referred to as bodily injury coverage. And you guessed it, 25 is $25,000 for property damage. 

States vary on minimum requirements. For Maryland, it is 30/60/15. Now think about this, how quickly would someone’s medical bills reach that 30 or 50 limit. So, who would be responsible for payment after that? It could be you. Think carefully when making decisions about how much coverage you need. 

Now if you have a loan on your car, the lender may require some additional coverage such as collision coverage or comprehensive physical damage. This is to protect the lender from losing money if something happens to the car. Collision coverage is just as it sounds; if there is a collision, the insurance fixes it. Comprehensive physical damage is to cover the car if something else happens like a hail storm puts dents in your car. 

The cost of your policy is determined by how much coverage you want and other factors such as the value of the car, safety features on the car, miles driven, how well you drive, age, gender, etc. Another item to consider is how often to compare insurance prices. Ideally, I suggest you get quotes every year, but at least check every other year. You may be surprised how much money you can save by switching plans. 

Selecting an Insurance Plan

Published on by JesseLeave a comment

Open Enrollment for Marketplace Health Insurance plans is right around the corner. In fact, this year it runs from November 1, 2022 through January 15, 2023. For information about Marketplace plans visit Healthcare.gov. For this blog, I want to discuss items to consider when selecting a health insurance plan. The Smart Choice workbook provides guided steps to selecting an insurance plan.

One of the first items to consider when selecting a health insurance plan is how you are currently using your health insurance. Do you have a primary care provider? Are there specialists that you work with? Sometimes we are connected to the medical professionals we currently visit. If that is the case, when selecting a new plan you want to know if those providers are in the new plan’s network.

You should also consider how you plan to use the insurance in the coming year. For instance, are you planning a surgery or considering expanding your family (having a baby)? If so, you want to review the Summary of Benefits document provided by the insurance company, which explains what, and how much is covered. This information can be found on the health insurance company’s website.

Another item to consider is the costs. Plans will have monthly costs (known as premiums), out of pocket costs, deductibles, and out of pocket maximums. Typically, lower monthly costs mean a higher deductible. Just make sure you pay attention to the overall costs, not just how much it will cost you monthly. Keep in mind that if you have the higher deductible, you need to have money set aside to cover it. I just shared a few items to consider and there is much more. The Smart Choice workbook can walk you through the process of selecting an insurance plan to meet your specific needs. The fillable workbook asks important questions that assist you in comparing insurance plans. It includes definitions of terms used with health insurance that can be confusing. The workbook is one of many tools offered by the Health Insurance Literacy Initiative (HILI). Additional resources are available on the HILI website. There will also be a fall series with workshops on choosing a health insurance plan, understanding your health insurance plan benefits, and healthcare options in your senior years.

Public Service Loan Forgiveness: Temporary Waiver and an Oct. 31 Deadline

Published on by DorothyLeave a comment

As the “Breathing Room” name implies, this blog is intended to offer you a break from life’s deadlines, stressors, and workloads, and give you a chance to take a breath, focus on yourself, and enjoy.  But, if you….

  1. Have federal student loans
  2. Are employed by any type of government or nonprofit organization
  3. Want to qualify for loan forgiveness under the Public Service Loan Forgiveness (PSLF) program, and
  4. Want to make sure you receive maximum credit for your participation,

don’t take a break quite yet.  Now is the time act before the October 31, dare we say it, deadline.

The Public Service Loan Forgiveness Program (PSLF), was created to increase the applicant pool for government and nonprofit jobs. PSLF is a federal program designed to provide an incentive to attract job seekers to employment in much needed, but often lower paying, service work. A component of the 2007 bipartisan College Cost Reduction and Access Act, PSLF promised to forgive the outstanding federal student loan debt for qualifying workers once they have made 120 monthly payments. However, the program was created without a clear, long term plan for implementation. With legislative and executive branch turnover, problems arose.

Public Service Loan Forgiveness had strict qualification requirements (which you can read about here,) and required specific action steps (which you can read about here,) to maintain that qualification.  However, once eligibility began in 2017, many individuals had their PSLF application rejected because of missed requirements, poor guidance, and misunderstandings. Many fixes were implemented over the ensuing years.

PSLF Waiver. In late 2021, the US Department of Education announced a short term PSLF Limited Waiver. As the name implies, the Waiver, which is set to expire on October 31, 2022, waives many of the original qualifying requirements. For a limited time, payments made under the wrong loan type, payments made late, and payments made prior to a new consolidation all count.  Additionally, educators who receive teacher loan forgiveness can count their qualifying time towards PSLF, and active-duty service members can count months of deferral or forbearance toward their 120 qualifying payments.

What, specifically, has changed for the Temporary Waiver until October 31? Here are a few of the major items:

Consolidated loans. Previously, consolidating student loans restarted the 120 payment count. Under the Waiver, payments made prior to the new consolidation loans now count.

Loan type. Under normal PSLF requirements, only payments for Direct Loans counted. Through the Waiver, borrowers receive credit for payments made on FFEL or Perkins loans as well. But, they MUST be consolidated into a direct loan before the October 31 deadline.

Teacher Loan Forgiveness. Teachers have their own loan forgiveness plan which provides limited dollar forgiveness after five years. Normally, outstanding loan balances would then also be eligible for PSLF after another 120 months. The Waiver allows those two time periods to run concurrently, and payments made during the teacher forgiveness window now count toward the 120 PSLF months.

Payment Plan. Payments made under graduated or extended payment plans are now accepted under the Temporary Waiver, but the loans must be consolidated into an income-driven payment plan prior to the October 31 deadline.  

Late and Partial Payments. Previously not counted toward the required 120, late and partial payments are now being retroactively added to the total needed to qualify. This should be done automatically, but borrowers should check. Similarly, certain periods of forbearance or deferment now count. This is a particular benefit to active duty military members.

This post is not a comprehensive list of changes under the Temporary Waiver. Check with your servicer, read through the government-provided information at StudentAid.Gov, complete the required forms and other actions by the October 31 deadline.

Then, breathe!