Previous Months


Four Tips for Building an Emergency Fund
Planning for emergencies is kind of like buying insurance: You pay into an account and hope you'll never have to use it. But life happens. Cars break down. Roofs leak. Kids break arms. Having money in the bank to cover those unexpected expenses can reduce stress and keep you from relying on credit cards and loans to make ends meet. Here are four easy and effective ways to establish and maintain an emergency fund:

  1. Start small. Many financial planners advise setting aside enough money to cover at least six months of expenses. That's a worthy goal. But for many people, it's also a daunting task that will take years to achieve. So be realistic. Set an achievable goal for your emergency fund. Dave Ramsey, a financial author and radio host of the "The Dave Ramsey Show," suggests starting out with a goal of $1,000 and working your way up to having three to six months of expenses.   
  2. Sell stuff and slash expenses. Yard sales, online auctions, consignment shops-selling items via such venues can generate cash to bolster your emergency fund. Take a hard look at your budget and consider everything fair game: expensive dinners, vacations, cable television and so on. You may find that a surprising amount of money can be freed up and stashed away in savings. The key, of course, is to direct those savings away from regular spending and into your emergency account.  
  3. Make it automatic. With online banking, it's easy to set up routine transfers from your regular checking account to a separate savings account. If allowed by your employer, allocate a portion of each paycheck to an emergency fund. Consider establishing the account at a financial institution other than your regular bank. As the saying goes, "Out of sight, out of mind." If the money never shows up in your regular checking account, you'll be less likely to use it for everyday spending.  
  4. Pump it up. When you get a bonus, cost-of-living adjustment, tax refund or windfall, consider using a portion of that money to bolster your emergency fund. Fight the temptation to increase spending with every new dollar that comes along. This will bring you closer to your end goal of six months of expenses.

Source: Cavanaugh & Co., CPAs and Dave Ramsey

GCU claims no responsibility or ownership for this content.


Create a Budget in Five Easy Steps

In 2014, the National Foundation for Credit Counseling found that approximately two out of five U.S. adults (39%) say they have a budget and keep close track of their spending, a proportion that has held steady since 2007. Though you may avoid creating a personal budget because you are afraid of what you will find, creating and working your budget monthly is one step closer to financial well-being. In fact, after abiding by a financial plan for a few months, you'll find it can help alleviate some financial stress. Here's how to create a budget in five steps:

Step 1 - What's Coming In?
Total your monthly income. This includes things like net wages, tips, interest earnings, alimony and child support. Don't include unreliable sources of income like gifts from family members.

Step 2 - What's Going Out?
Total your expenses. Write down all the things you spend money on each month. Don't guess. Take some time and run through your bank statement. You might find things you forgot about. Create a budget category for everything you're spending money on - you'll adjust it later.

Step 3 - Does it Add Up?
Ideally, your income will be greater than your expenses. If that's not the case, review your expenses and look for places to scale back. Evaluate your needs vs. wants. When you can't reduce your expenses you'll have to increase your income. Take on a part-time job or ask for overtime. Or find ways to make money from hobbies. Evaluate your tax withholding. If you typically receive a tax refund it means you're probably having too much money withheld from your paycheck each month.

Step 4 - Put the Paper into Action
Once your budget's on paper it's time to start living by it. Refer to your budget to make spending decisions. At the end of the month write down the actual amount you spent in each budget category. Highlight any places where you went over your budget.

Step 5 - Make Budgeting a Habit
Don't give up if your budget doesn't work the first month! It can take a few months of practice to get your budget into the perfect place.

Source: The National Foundation for Credit Counseling, MoneyNowUSA

GCU claims no responsibility or ownership for this content.


Focus On Expenses, Not Just Income

Listen closely. In workplaces across America you'll hear this refrain: "If only I made more money. Then I'd have plenty to live on."

It's important to earn a sufficient salary to pay the rent, keep the lights on, service the car and purchase school supplies. But the income side of the ledger tells only half the story. Expenses are the other half.

Retirement planners often tell clients to take a hard look at expenses they expect to incur when full-time employment draws to a close. But even if you're decades from retirement, it makes sense to scrutinize your routine and not-so-routine expenses on an annual (or more frequent) basis. Folks who accumulate wealth over a lifetime generally develop a habit of living within their means. In other words, they've whittled down their expenses to a level commensurate with their income. By one means or another, they've learned to stick to a budget and save for the future.

Does that mean they never take a vacation? Or buy a newer model car? Or send their kids to college? No.

It does mean, however, they've learned to sacrifice in the short term for long-term benefits. They refuse to live paycheck-to-paycheck until the paychecks dry up.

Here are four expenses that can often be trimmed with minimal pain:

  • Cable or satellite television. Watching pay-per-view events and TV packages with premium channels can drain your budget in a hurry. Take a break from TV for a week and use the time to read a book or play cards with friends. Your thinking may change. You may find that the cost of premium television begins to outweigh the benefits.
  • Auto fuel. Consolidate trips to the store, the school and the church. Planning ahead is a relatively painless way to minimize visits to the gas pump.
  • Telephone services. If your wireless bill is beginning to resemble a phone book - with most of the records logged against your kids' phones - maybe it's time to shop around for less expensive plan.
  • Vacations. America is a huge country (just ask someone who lives in Europe). It's also a great place to explore on a budget. Road trips, especially if planned for the off season, can provide a wealth of memories for a reasonable price.

Take steps to increase your earning potential, but don't forget the other side of the ledger.

Source: J.P. Spillane, CPA, PA    
GCU claims no responsibility or ownership for this content.


The Outlet Mall: A Good Place to Get a Good Deal?

A few years back, outlet malls had an almost seedy reputation. They tended to be located far from upscale neighborhoods and generally offered defective or second-rate goods. Nowadays, outlet stores look a lot more like their full retail counterparts. Though outlets may not feature showpiece displays or offer wide selection, they're popular for one main reason: perceived savings. However, there are a few things to keep in mind when shopping at outlet malls:  

  • Check Out the Quality of Items. Several studies have shown that over 80% of the products sold at factory outlets were manufactured specifically for those stores. So the blouse that's on the rack at the outlet store may not be identical to a similar item displayed at the store's retail establishment or on their website. At the outlet mall, leather in a purse may have been replaced with plastic; sweaters may be shorter and have fewer buttons; T-shirts may be constructed with fewer stitches and lighter fabric. Although these differences in quality may not be a deal breaker for you, it's always good to know what you're buying.
  • Know Your Discount. Using a marketing technique known as reference pricing, bold price tags at the outlet store may advertise a huge discount from an item's "retail price." Unfortunately, that "retail price" may have been concocted at the store's recent management meeting. There's no guarantee that merchandise at the outlet store was ever listed for that price at a retail establishment.
  • Shop Sales and Promotions. Outlet malls have sales, too, so it makes sense to shop when items are truly discounted. Sign up for an outlet store's mailing list to be notified about upcoming promotions. Before you buy, make sure the retail store isn't offering an even bigger discount on your favorite item.
  • Shop During the Off-Season. Look for bargains when stores are trying to move their end-of-season inventory. Buy beach apparel in the fall and winter coats in the spring.
  • Don't be Afraid to Leave Empty-Handed. Driving a long distance to an outlet mall doesn't necessarily justify a shopping spree. If it makes sense to buy an item, buy it. If not, wait to shop another day.
  • Know the Store's Return Policy. Retail establishments may not take returns from outlets. Others may require price tags and receipts before accepting returns.

As always, follow the wise consumer's tried-and-true maxim: buyer beware.

Source: J.P. Spillane, CPA, PA    
GCU claims no responsibility or ownership for this content.


Should you rent or buy a house?
For many folks, the lyrics of a 1960s rock song summarize the American dream: "Our house is a very, very, very fine house." According to U.S. Census figures, about two thirds of American families are homeowners. But buying a house or condo may not be the best choice for every family in every situation. Renting offers the following advantages:

  • Greater flexibility. When renting a house, apartment or condo, you have the option of moving at the end of the lease term. No need to contact a realtor, no hassle with buying or selling. For those who want to keep their options open, especially in terms of job location or dwelling size, renting may prove the better choice.
  • Opportunities to invest elsewhere. Instead of plowing your savings into a home, you might get a better return by contributing to mutual funds or other investments. Depending on the housing market in your city, the annual increase in your home's value may barely outpace inflation.
  • Lower cost. Apartments are often smaller than homes so heating and cooling expenses tend to be lower. If you don't have a lawn, you won't incur the cost of water to keep it green. Roof leaking? Appliances on the blink? Call the landlord. Home repair and maintenance aren't your responsibilities.

Of course, as many realtors and financial analysts rightly point out, homeowners also enjoy significant advantages:

  • Greater flexibility. Ironically, homeowners enjoy certain freedoms denied to renters. If a homeowner wants to paint a wall or hang a picture, he or she doesn't answer to a landlord. Installing a doggy door isn't a problem. Hiring a remodel contractor to tear out a wall is perfectly acceptable. Don't try this if you're a renter.
  • Increasing equity. Of course, one of the greatest advantages to buying a home is the likelihood of increased equity over time. As long as your mortgage is being whittled down by monthly payments, you're building equity-even if your property value remains stable.
  • Lower taxes. The ability to deduct mortgage interest and property taxes (if you itemize) can significantly lower your end-of-year tax bill. Renters must forgo this benefit.

Clearly, the choice to rent or buy a home depends on individual circumstances and tastes. 

Source: J.P. Spillane, CPA, PA    
GCU claims no responsibility or ownership for this content.


Ask these questions before paying off a mortgage early

Making extra principal payments to retire a mortgage before the end of a 15- or 30-year term may seem like a no-brainer. After all, who wouldn't want to extinguish that substantial debt and those monthly principal and interest payments? But paying off a mortgage early may not be the best choice for every household. Here are five questions to consider:  

  • Do you have high-interest credit card or loan debt? If your credit card company is charging 15% on your outstanding balance, you can earn a guaranteed 15% by liquidating that debt. It makes sense to pay off high-interest accounts first, before putting extra funds toward your low-cost mortgage. That's especially important if you're in a higher tax bracket. Home mortgage interest is tax deductible-consumer debt is not.
  • Have you established an emergency fund? Life happens. If you haven't set aside funds in an easy-to-access "rainy day" account, you may be forced to acquire additional debt when life's inevitable troubles come along. Build up that emergency account to cover at least a few months of living expenses before supplementing your mortgage payments.
  • Are you contributing to a retirement plan at work? Many companies will match a certain percentage of funds contributed to a 401(k) retirement account. For example, your firm might match 50% of the money you contribute, up to a maximum of 6% of your salary. Don't pass up that offer. It's easy money and certainly earns a better return than dollars paid toward your mortgage principal.
  • Can you get a better return elsewhere? The stock market is notoriously volatile so paying off your mortgage may help you sleep at night. However, if you can handle the risks of stock-based mutual funds or similar accounts, it may be prudent to invest at least a portion of your extra money there, especially if you won't need the money soon.
  • How's your cash flow? Before you retire from full-time employment and paychecks are replaced by social security payments, pensions and/or retirement account withdrawals, run the numbers. Retiring without mortgage debt may be a wise financial goal for your family, but it's prudent to base your decisions on hard facts, not wishful thinking or uninformed advice.

Source: J.P. Spillane, CPA, PA    
GCU claims no responsibility or ownership for this content.


Buy a Car and Save

Use the following steps and learn how to locate, price and negotiate to buy the new car you want. Using this information could save you thousands of dollars on a new car! It also puts you in charge of the deal-making process — and that feeling of empowerment is a good one.

  • Step 1: Use Cash or Get Approved for a Car Loan: If you have the cash, great! Use cash. If cash isn't an option, get approved before you even walk into the dealership. This will be the bargaining chip to get you the best interest rate. Getting approved for a loan from a bank, credit union or online lender will show you what interest rate you qualify for.  In the end, you can still accept dealership financing if needed. 
  • Step 2: Price Your Car and Your Trade-in: Everyone knows that the price of a new car is usually negotiable but how much of a discount can you expect? Use tools such as Kelley Blue Book, NADA or to find out.
  • Step 3: Locate Your New Car: Keep in mind that the more flexible you can be about options and color, the wider the range of the vehicles you'll find for sale. Being flexible will also give you more leverage to negotiate a better price since you are not emotionally connected to one specific car.
  • Step 4: Use Dealership Internet Departments: Shop through a dealership's Internet department and it will save you time and money. You can easily communicate with the Internet manager by phone or email.  Before you head to the dealership, review all your notes and bring them with you.
  • Step 5: Try Negotiating a Lower Price: Request Internet price quotes from at least three local dealers. Take the lowest price, call the other dealerships and say, "If you beat this price, I'll buy it from you." The dealer almost certainly will give you a better price.
  • Step 6: Review New Car Fees and Check Dealer Financing: Besides the cost of the car, you have to pay sales tax, registry fees and a documentation, or "doc" fee. Now ask the Internet sales manager to supply a breakdown of all the fees, or a "worksheet," which lists the purchase price, the vehicle's invoice and all related fees. Review the figures carefully before signing the sales contract.
  • Step 7: Sign the Paperwork: Make sure there are no dents or scratches on the body or the wheels. Check that all the equipment is included, such as floor mats and the owner's manual. If anything is missing or needs repair, ask for a "Due Bill" that puts this in writing. Review the contract carefully and make sure the numbers match the worksheet and that there are no additional charges or fees.
  • Step 8: Take Delivery of Your New Car: Let the salesperson give you a tour of your new car. This could include showing you how to connect your smartphone to the car's Bluetooth system and learning how to use other important features and safety devices. If you don't have time for a complete demonstration when you sign the contract, ask to visit the dealership a week later for this important step.

As you drive away, there is only one more thing to do: Enjoy your new car!



Don't Ruin Your Credit Score! Avoid These 4 Follies

Legendary American investor Warren Buffet once said, "It takes 20 years to build a reputation and five minutes to ruin it." The same could be said of good credit. It isn't built overnight or by accident. Most Americans with stellar credit scores have exercised financial discipline for years. That's why lenders are willing to offer them mortgages and car loans at favorable interest rates. Like a good reputation, a strong credit score can be easily ruined. Here are four ways to devastate your credit score:

  • Max out your credit cards and don't make required payments. Your credit score is a number between 300 and 850 (worst to best) that most lenders use when deciding whether to extend credit. About 35% of your credit score comes from your payment history. Paying late or paying less than required minimums can wreak havoc on your credit score and may signal to lenders that you're overextended.
  • Co-sign on an irresponsible friend's loan. There's a reason why your pal needs a co-signer: he or she is perceived as a high credit risk. If your friend defaults on the loan, then you're responsible for the unpaid balance. As William Shakespeare once wrote, "Loan oft loses both itself and friend." Remember this: If you co-sign for a loan, the status of the loan will appear on your credit report.
  • Close credit card accounts in quick succession. Shutting down a credit card or line of credit account may adversely affect your debt-to-utilization ratio (how much you owe in relation to your credit limits). As this ratio climbs, your credit score tends to sink. For example, you have three credit cards and each has a $1,000 limit. You carry a balance of $500 on one of those accounts. That's a debt ratio of $500 to $3,000 or about 17%. If you close one of the accounts, the ratio will jump to 25% ($500 to $2,000). Though you haven't accumulated more debt, your credit score may be hurt.
  • Default on your installment loan or home mortgage. This is another surefire way to trash your credit score. A home foreclosure, for example, may cause your credit score to plunge by 200 points or more. Because most negative information stays on your credit report for seven years (10 years for a bankruptcy), lenders may be reluctant to offer you money for a very long time.

Avoid these follies to keep your credit score in tact! This will help you build long-term equity so that you can take out larger loans with favorable interest rates.

Source: J.P. Spillane, CPA, PA


10 Steps to Making a Financial Budget

In a 2013 national survey, the National Foundation for Credit Counseling found that only two out of five Americans have a monthly budget and keep close track of their spending. Learn how to budget by following these 10 steps:

1. Understand the necessity of a budget.
A budget will help you get a grip on your spending-and help you make sure your money is being used the way you want it to be used.

2. Know the three steps of creating a budget.

  • Identify how you're spending money now.
  • Evaluate your current spending and set goals that take into account your long-term financial objectives.
  • Track your spending to make sure it stays within those guidelines.

3. Use budget software.
If you use a personal finance program such as Quicken or Microsoft Money, the built-in budget-making tools can create your budget for you.

4. Don't drive yourself nuts.
One drawback of monitoring your spending on your computer is that it
encourages overzealous attention to detail. Once you determine which
categories of spending should be cut (or expanded), concentrate on those
categories and worry less about other aspects of your spending.

5. Watch out for cash leakage.
If withdrawals from ATMs seem to evaporate from your pocket, it's time
to keep better records. In general, if you find yourself returning to the
ATM more than once a week, you need to examine where that cash is going.

6. Don't spend beyond your limits.
But if you do, you've got plenty of company. Government figures show
that many households with a total income of $50,000 or less are
spending more than they bring in. This doesn't make you an automatic
candidate for bankruptcy, but it's definitely a sign you need to make
some serious spending cuts.

7. Beware of luxuries dressed up as necessities.
If your income doesn't cover your costs, then some of your spending is
probably on luxuries-even if you've been considering them necessities.

8. Remember to save.
Aim to spend no more than 90% of your income. That way, you'll have 10%
left to save for big picture items.

9. Don't count on windfalls.
When projecting the amount of money you can live on, don't include dollars
that you can't be sure you'll receive, such as year-end bonuses, tax refunds or investment gains.

10. Beware of spending creep.
As your annual income climbs from raises, promotions and smart
investments, don't start spending for luxuries until you're sure that you're
staying ahead of inflation. It's better to use those income increases as an excuse to save more.

The 2013 Financial Literacy Survey
CNN Money - 10 Steps to Making a Financial Budget


10 Tips for Spending Your Tax Refund Money

Can't wait to get your tax refund? Don't spend it all in one place! Here are 10 tips for spending your tax refund money wisely:  

  1. Save for an Emergency: You can't always predict life events that will affect your finances, but you can prepare by establishing an emergency fund. Use your tax refund to start saving for the future.  
  2. Pay Off Debt: If you have fallen behind on your bills, use your tax refund to help you catch up. Or, pay off some of the principal on a loan balance-this will reduce the interest charges, saving you money in the end.
  3. Save for Retirement: Save for your retirement by putting some of your tax refund in an IRA. This is a great way to grow your retirement and help ensure you enjoy your golden years.
  4. Invest in Your Career: Have you been thinking about going back to school to earn a few more credits or your next degree? If so, you can use your tax refund to help fund your education.
  5. Improve Your Health: Use your tax refund to get healthy. Start buying fresh organic fruits and veggies or invest in a gym membership and make a commitment to actually go!
  6. Tackle Big Projects around the House: House repairs are difficult to afford when bills pile up. Use your tax refund to get rid of those termites, paint your house, upgrade your plumbing or whatever else your house needs.
  7. Make Your House Energy-Efficient: Use your tax refund to make your home more energy-efficient. Start buying incandescent light bulbs with LED or make a bigger investment by purchasing energy-efficient appliances.  
  8. Buy Life Insurance: Consider buying life insurance to protect your spouse and children in the event of your death. A good policy will cover funeral costs as well as your household's expenses for a year or more.
  9. Save for a Family Vacation: Family vacations are not only fun, but also provide a good opportunity to bond! Whether you go to a relaxing beach or a national park, this is a great chance to make some memories together!
  10. Give to Charity: During a down economy, charities are especially in need of money because people are donating less. If you do not have debt that you need to pay off, give some of your tax refund to your favorite charity.

Source: Can Do Finance 
GCU claims no responsibility or ownership for this content.  


Tips For Cutting Medical Bills

With the burgeoning cost of pharmaceuticals, doctor visits, and hospital stays, staying healthy has become an increasingly expensive proposition. In addition, health insurers are passing along more and more of their costs in the form of higher deductibles, increased premiums, and larger co-payments. Out-of-pocket costs for even one hospital stay can break a household budget, and it may take years to recover. That's the bad news. The good news? You can control some of these ever-increasing health care costs by following a few simple strategies:

  • Negotiate, negotiate, negotiate. You haggle when buying an automobile. Why not use a similar tactic when discussing items on your hospital bill? In fact, out-of-pocket costs for a surgery may even exceed the cost of that shiny vehicle sitting in the driveway. Fortunately, health care providers are often amenable to reducing invoiced amounts, and some may offer discounts for upfront payment. You might also research the cost of similar services in your area and use those figures as a starting point for negotiation. One place to start is
  • Scrutinize the bill. Hospitals are notorious for double billing and mischarges. When you receive the itemized bill, pore over it - line by line. Look for charges that don't make sense ($50 charges for hospital supplies that are available for a dollar at the local department store); charges for services you didn't receive (physical therapy that never happened); or more than one charge for the same item (separate charges for the hospital room and standard amenities like bed sheets). Examine the rates for these items as well. Your insurer may have negotiated lower rates, but you may have been charged more-expensive uninsured rates. And make sure all eligible out-of-pocket expenses are credited toward your deductible.
  • Comparison shop before you buy. Unless you're being treated for an emergency, you may have time to locate more cost-effective health care alternatives. For example, using a stand-alone MRI imaging center may cost significantly less than the same test if offered by a hospital. A walk-in clinic or urgent care facility is generally cheaper than a visit to the local emergency room. Switching to generic drugs, when available, can save you up to 60% over name-brand equivalents.

If in doubt, call your insurer's hotline to ask for help. Remember: insurance companies have a vested interest in your good health.

Source: J.P. Spillane, CPA, PA  
GCU claims no responsibility or ownership for this content.