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Financial Tip Archive

April

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. 

March

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 healthcarebluebook.com.
  • 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. 

February

Know Your Credit Score
It's that time again. Time to consider those annual routine tasks we need to make sure get on our list and get done!

  • Make an appointment for my yearly physical. Check.
  • Gather my documents for taxes. Check.
  • Pull my credit score.... Really?

Yes! Knowing your credit score is important because it shows lenders how responsible you are with money. Don't let this annual task fall by the wayside!If you have a good credit score (generally above 700), you will have an easier time getting a loan, since lenders will see that you are likely to pay it back. And the better your score, the more likely you are to get lower interest rates.Surprisingly, your income does not affect your credit score at all. But more than 25 other factors do, including:

  • How much credit you have been extended (credit cards, loans, etc.)
  • How much you owe (total debt)
  • Whether you pay off your debt on time
  • How many times you have asked for credit
  • How long you have had credit In the United States

There are three nationwide consumer reporting agencies: Experian, Transunion and Equifax.You can get a free copy of your credit report every year. That means one copy from each of the three companies that writes your reports. The law says you can get your free credit reports if you call Annual Credit Report at 1-877-322-8228 or go to AnnualCreditReport.com.Check your credit report annually and review the information to ensure all of the information is correct and you have no disputes with the data.If you find a mistake, write a letter telling the credit reporting company that you have questions about information in your report. Explain which information you think is wrong and why you think so. Send them a copy of the report with the items circled and send supporting documentation as to what the data should say.  Make sure to mail the information Certified mail. Ask the post office for a return receipt. The receipt is proof that the credit reporting company got your letter.The credit reporting company must look into your complaint and answer you in writing.

Source: consumer.gov
GCU claims no responsibility or ownership for this content.

December

Holidays and the Zero-Interest Credit Card

With the holidays right around the corner, zero- interest credit cards sound like a great deal, but are they?

With taglines like "Pay no interest on balances transferred from other credit cards!" and "Make interest-free purchases during the first 90 days!" why wouldn't you take advantage of such an offer?

Although a 0% credit card may be a wise choice for some people, the devil is in the details - and in your individual propensities as a consumer. Consider the following questions:

  • Is the balance transfer really free? Yes, you may not be required to pay interest on a balance moved from one credit card account to another. But your new account may charge a fee for making the transfer. Such fees typically run from 3% to 5%. If your balance, for example, is $3,000 and you pay a transfer fee of 3%, you'll be charged $90 just to make the switch. And in some cases, the lender doesn't set a cap on this fee; it's a flat percentage. So the higher the balance that's transferred, the higher the transfer fee.
  • What happens after the promotional period? You may be offered a 0% credit card now, but the offer may expire in six months. After that, the rate will likely adjust upward, sometimes substantially. So if you can't pay off the balance before the promotional period ends, you may want to deposit the offer in the nearest trash can.
  • What happens if you're late on a payment? Some companies have strict terms on new credit cards that mandate substantial penalties if even one scheduled payment doesn't arrive on time. The card may be cancelled; the full balance may be immediately due; the 0% rate may vanish like the morning fog. So reading the details of the credit card agreement before you make the switch may save headaches and dollars later on.
  • Are there minimum use requirements? To keep the promotional rate, you may be required to use the card at least once a month. If you don't, look out. The rate may jump or penalties may be assessed. Again, reading the fine print is crucial to making a prudent decision.
  • Will you pay off the balance - really? Know your propensities. If it's likely that six months from now the balance on your new credit card will remain unpaid, perhaps it's time to redouble your efforts and concentrate on your existing account.


Source: J.P. Spillane, CPA, PA

November

Nine Ways to Cut Your Spending Consistently spending more than you earn is an easy way to accumulate debt. To stay out of debt, you'll either need to find a way to earn more or spend less. Here are 10 ways a student can cut his or her spending.

  1. Make small changes that add up to big savings. If you cut out one expensive coffee every day, you could save about $20 each week. That adds up to more than $1,000 a year.
  2. Do it yourself - Stop paying others to do things you can do yourself. For example, wash your shirts yourself instead of taking them to the dry cleaner.
  3. Eat out less - Commit to cooking more at home. Bring your leftovers to work or school for lunch.
  4. Shop smarter - Shop with a list so you won't buy something you don't really need. Look for weekly specials at the grocery store, sales on big items and discounts for services. Shop at second-hand stores and through online sites such as eBay, Craigslist and Kijiji.
  5. Use less energy - Spend less on heating and cooling your home. For example, don't leave lights on when you're not using them. Use less heat or air conditioning if you're away from home or sleeping. For more tips, visit the Ontario Power Authority website.
  6. Use your car less - Save money on gas by walking more. Use a bicycle or take public transit if it's cheaper than driving your car.
  7. Consider getting rid of your car - You may save money by using taxis or rental cars. If you live on campus you can utilize the UhaulCarShare Program. Do the math to see if this will work for you.
  8. Find cheaper alternatives - Rent movies instead of seeing them in the theatre. Pick a holiday spot closer to home. Spend less on your cell phone by getting a cheaper package or talking less.
  9. Pay cash - It may seem easier to use a payment plan that allows you to make small monthly payments. But if there's interest on those payments, they'll cost you more over time.
  10. Borrow smarter - You'll pay a high rate of interest to borrow money on your credit card. Instead, try to get a cheaper loan that will leave you with lower monthly payments overall. 

Source: Nine Ways to Cut Your Spending
GCU claims no responsibility or ownership for this content.

October

Build Your Credit Wisely

Few Americans can afford to pay cash for everything they want or need - a car to get to work, a house to live in, or a college education to increase earning potential. For most people in our modern society, some form of credit has become a necessity. And the way in which a person's credit history is established often affects the interest rates that lenders are willing to offer and the likelihood that loan applications will be approved. So it's important to build credit wisely.

Following are three tips to help establish your credit worthiness in the eyes of potential lenders.

Cash is still king. Just because a financial institution offers to extend credit, don't forget that it's often wiser to defer purchases until later. Pushy sales people may claim that you can "afford" the minimum monthly payments on a luxury automobile that costs more than a lakeside bungalow. But when your bills stretch the limits of every paycheck, you may be headed for financial disaster. Ironically, avoiding certain debts is often a prudent way to establish good credit.

Take it slowly. Apply for one credit card, use it sparingly, and pay off the balance every month. That's the golden rule for bolstering your credit score. Opening multiple accounts over a short time may signal to lenders that you're overextended. When you take out a loan for a car, make sure you can meet the monthly payments even if your other expenses spike in a given month. In other words, establish some wiggle room in your budget. Don't assume that expenses will always remain at current levels. Emergencies happen. Plan for them so you don't end up missing a minimum payment on a loan or credit card bill.

Beware of increased credit limits. As your credit score climbs, banks and other financial institutions will likely allow you to borrow more. Use caution. Remember that lenders have a vested interest in lending money to folks who pay on time. When you take out loans, they make money. Maybe you can borrow; that doesn't necessarily mean that you should borrow. Again, the choice to acquire debt in the form of loans or credit card purchases should be driven by a plan - not an impulse.

Source: J.P. Spilane, CPA: Build Your Credit Wisely
GCU claims no responsibility or ownership for this content.

September

Needs verses wants is a standard topic when teaching financial literacy, but did you know it can also be the main structure of creating a budget? According to the Harvard Bankruptcy Professor Elizabeth Warren, needs verses wants can be used to create a 50/30/20 budget.

Here's how it works:

Using your after-tax income, allocate 50% of your expenses in the "Needs" bucket. "Needs" include all the basic expenditures you really need to make each month: outlays for housing, utilities, transportation, food, insurance, child care, tuition and minimum loan payments. If you're contractually obligated to pay something (a credit card minimum, child support or a cell phone bill), it's a need, at least for now.

Your "wants" can consume 30% of your after-tax pay. Vacations, gifts, entertainment, clothes, eating out and other expenses are all "wants." Some bills you pay might overlap the two categories. For example, basic phone service is a need. But features such as call waiting or unlimited long distance are wants. Internet access and pay television are two other expenditures that can feel like needs but usually are wants, unless you're on some kind of long-term contract.

Savings and debt repayment make up the final 20% of your budget. Warren's a bankruptcy expert, remember, and she knows the devastation that results from too much debt and too little savings. To achieve financial independence and minimize the chances of disaster, you need to get rid of consumer debt, save for retirement and build your emergency fund.

Once you are done setting up your budget in this new manner, you may be discouraged by how far you are from the 50/30/20 ideal. So what should you do if your numbers are out of whack? Remember that the 50/30/20 plan is a goal to work toward, not something you'll necessarily achieve overnight. Here are some places most people can tweak:

Food. You've got to eat, but most of us could trim our grocery bills, often substantially, without too much effort. Plan your meals, cook from scratch, use up leftovers, clip coupons -- you know the drill.
Utilities. You want the lights to stay on, but the air conditioner doesn't have to blast 24/7.
Transportation. More carpooling and public transportation, less time alone in your car. Your car payment could be what's killing you.
Insurance. Higher deductibles can help reduce your premiums, as can shopping around and taking advantage of all available discounts. Ditch insurance you don't need, such as life insurance if you don't have financial dependents, or collision and comprehensive coverage on a clunker.
Ditch the contracts. Early termination fees might make canceling your cell service too expensive, for example, but once your contract is up, consider switching to prepaid or pay-as-you-go service.

If it's your debt that's unmanageable, you may need to consider some more drastic solutions -- credit counseling, or debt settlement.

Once you get back on your feet, though, the 50/30/20 plan can help you stay there.