January 2021
Financial Planning

Every year, millions of people make New Year’s resolutions, hoping to spark positive change. One of the more popular New Year’s Resolutions we hear about are those individuals looking to make their health a priority, and trim a bit of that quarantine 15. Just like slimming down your waist size is good for your health, trimming the fat in your monthly budget is a good way to bolster the health of your emergency fund, cut back on spending, and all-in-all have a healthy financial regiment. But like a diet, that takes discipline.

• Pay yourself first. - When payday comes, dollars tend to disappear quickly. So put your savings on autopilot. Set up automatic deposits that move money directly from your paycheck to your savings account before those dollars have a chance to disappear.

• Rid yourself of "recurring" charges. - Scrutinize your credit card statement and identify and cancel any "recurring charges" for services you no longer use, such as magazine or video streaming subscriptions, gym memberships, or premium access sites or upgrades.

• Increase your insurance deductibles. - If you can afford the higher out-of-pocket costs in the event of a claim, consider increasing the deductible on your home and auto insurance policies. For example, raising your auto insurance deductible from $500 to $1,000 can save you approximately 13% on your auto premium. You can also save money by bundling policies, or having a number of different types of insurance policies, such as homeowners and auto, at the same carrier. It also doesn't hurt to shop around for a better deal around renewal time, either.

• Save on stay-at-home. - Pandemic-related stay-at-home orders and related increases in the number of people working from home has resulted in many expenses that no longer need to be paid. For example, if you're no longer paying commuting expenses or for meals out or for your annual overseas vacation, funnel those one-time expenses into savings.

• Save anywhere you can. - Every quarter or dollar or $20 you can save, no matter where you can find the savings, can add up fast. Consider enrolling in a program like Acorns, which sweeps your spare change on debit or credit card transactions into a savings account. Or save on shopping by making your purchases on online sites like Rakuten and Ibotta, which give you refunds for shopping at their sites.

• Refinance your home. - If you haven't taken advantage of record-low mortgage rates, consider refinancing your home loan to a lower rate. Even a 1% reduction in your interest rate can result in very material interest savings over the life of your mortgage. A $250,000, 30-year-fixed home loan at 4.25% will cost you $1,230 in principal and interest each month. But you'll pay just $1,088 a month, saving $142 per payment, if you refinance to a 30-year loan at 3.25%.

• Don't buy the latest gadget. - Buying the hottest new smartphone or electronic gadget might give you bragging rights, but it will also dent your wallet A cellphone or computer two or three models older than the latest version can be 70% cheaper and still a major upgrade over what you have.

• Buy used wheels. - One way to reduce your monthly bills is to shrink your auto payment which may mean steering away from buying a new vehicle, which loses 20% to 30% of its value in year one, or not leasing a vehicle that forces you to get a new lease when the current term ends.

By reviewing every expense that you have and asking yourself, 'Can I eliminate or reduce some of my expenses,' is that first step in becoming a bit more in control of your spending and savings habits. And by implementing even just a few of these tips, your financial fitness will be off to a great start in 2021!

If you have questions, please contact us.

MARKET UPDATE
COLLEGE AND TAX PLANNING
401(K) ALLOCATION

To download the January 2021 Newsletter: CLICK HERE