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Creating Your Year-End Financial Checklist

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It is that time of the year where you make and list and check it twice! But no we are not talking about Santa Claus or your Christmas shopping list, we are speaking about your financial checklist. Everyone’s situation is different, and complexities are inevitable. So Bankrate.com created a few tasks you might want to consider squeezing in before 2018 comes to an end, per the experts (you might see a familiar name):

1. Make sure your holiday spending estimates are brutally honest

Soon enough, if not already, you might declare this and that financial resolution. But in December, there is the added risk of digging yourself into a deeper financial hole from all of that holiday spending. So, try to get ahead of that particular red flag by doing the math of what will cost you what — and be brutally honest.

For example, it’s all too easy to think ‘I’ll spend $400 on gifts’ and assume that’s all the extra spending you’ll do. Reality check? It’s probably not.

“They haven’t accounted for, you know, the new towels they are going to buy for the house because guests are coming or the extra food that they are going to spend [money on] to have a big family dinner or the travel costs they are going to incur to go visit somebody and on and on and on,” Khalfani-Cox says.

So, factor in all of the costs. And if you want to save more in 2019, or hit some other milestone, you may want to find ways to reign in those expenses before it’s too late.

2. Take stock of your finances

Take stock of your finances, including debt and savings. We know: it can feel painful and emotional to do so. But, it will give you a baseline to help you decide what to do next.

“Just make sure you look at these numbers,” says Ethan Bloch, founder and chief executive of Digit, an automated savings app.

Ash Exantus,  director of financial education at BankMobile and author known as “Ash Cash,” also recommends taking stock of whether you achieved your 2018 financial goals — if you set them.

If you didn’t hit them, don’t dwell on defeat. Instead, learn from what happened or didn’t happen. And regardless of where you are at, it’s better to check in than not over the long haul.

“Your money telling you what to do instead of you telling it what to do is really not going to allow you to live the life that you want to live,” Exantus says.

3. Start dreaming about your next financial goal

Now for the fun part: Get dreaming and set your financial goal or goals for next year.

Need a starting place? Deb Kriebel, partner and a wealth manager at Pinnacle Advisory Group, encourages you to try save more than the year before.

“At the end of the year, maybe you look and maybe say ‘oh, I wasn’t able to max out my 401(k) this year. I’m going to max out next year,’” Kriebel says. “Or ‘I wasn’t able to get to a Roth. I’m going to try to do that next year.’ Or, you set up an investment account and you are saving and then say maybe ‘I’m going to increase that by 10 percent.’ And you kind of set a target for yourself for the next year to save more, invest more.”

Whatever your goal is — to increase savings or not —write it down somewhere and choose a starting point to try to attain it. Spoiler alert: even this part is hard. So, don’t go wild here with goals. Digit’s Bloch recommends focusing on one goal and figuring out how much you need by when.

Get specific with the costs, too. ‘I want to get a car this year’ isn’t enough, Exantus says.  You’ll want to consider what kind of car, how much it will cost, including insurance and gas expenses.

4. Consider your employment situation

Carve out the time to think about where you’re going career wise or life wise and where you want to go as it will inevitably tie to one side of your balance sheet: your income and earning potential.

“I think it’s one of the biggest things most people could do that is really underrated right now in our society,” Bloch says.

Part of this soul searching should include assessing how much your employer pays you — and deciding whether you need to do something differently.

“Really focus on what are those goals you want to accomplish, how do you want to accomplish them and what are the tools you need in order to accomplish them — whether it’s a new job or a side hustle,” Exantus says.

5.  Use fintech or digital banking apps to help you automate and understand your cash flow

Evaluating your cash flow doesn’t have to be a laborious experience. Apps like Mint can comb through your financial data to help you get a handle on your spending and savings across all of your accounts. Your bank may also offer similar functionality. Large banks, like Citi, and small banks, like Mercantile Bank of Michigan, offer digital budgeting tools, for example. Depending on how many accounts you have, it might just mean you logging in to a couple of mobile apps to see where you stand.

Then, consider what financial areas you might want to automate, so that the task gets done without requiring regular work from you. This won’t be everything.

“The reality is most people can’t fully automate their financial life because they don’t have enough cash for buffers,” Digit’s Bloch says. “To really automate everything, you need a pool of cash in your checking account. In reality, most people just don’t have that.”

So, consider settling on the areas of your finances that you can safely automate. This approach could help you avoid the inertia that comes with taking on a manual banking task that could feel daunting, like paying down college debt.

“Most people do not want to manage their money every day or every week and they shouldn’t. It’s ridiculous,” Bloch says.  “I don’t know how to grow my food. I eat food every day. It works great. I don’t know how to repair my car. I drove it to work today. It works great. … I think [finance] is going to become like this.”

6. Max out your 401(k) and find other ways to save

Now is the time to contribute the maximum amount to your 401(k), if you have one and have the funds to do so.

If you are under 50, you can contribute up to $18,500 in 2019. If you are 50 or older, you can contribute another $6,000. The perks of pre-tax contributions coming from your paycheck are reducing your taxable income, and at the same time, forcing you to save, Pinnacle Advisory Group’s Kriebel says.

To save more, consider opening up a Roth IRA, which allows you to put after-tax money aside that grows tax-free at a time of year where you have a good idea of your annual income.

This year, the maximum amount workers can contribute to a Roth IRA is $5,500 — if you’re younger than 50. That goes up to $6,000 in 2019. Pro tip: the amount you can contribute changes based on your income. If you’re single, contributions start to phase out at $120,000.

“I think it’s a fabulous way for anyone to save if you are under the income thresholds,” she says.

Unlike a retirement account, a Roth IRA lets you take the principal out — what you contributed to it —with no tax. “It’s a great way to have a kind of emergency fund,” Kriebel says. “But in the same regard, invest it, let it grow and hopefully you won’t need it [and] it will just keep growing.”

7. Take advantage of tax breaks

Don’t overlook potential tax breaks. Yes, they’re considerably different than last year’s because multiple changes to tax rules have gone into effect.

But there are breaks to consider, such as if you’re a small-business owner. Case in point: In the Tax Cuts and Jobs Act provision, a qualified business income (QBI) deduction lets small-business owners deduct as much as 20 percent of their qualified business income.

“It is a nice way to not get taxed on all your income while you’re trying to build,” Kriebel says.

It may also be a good time to check in with your accountant before year’s end, especially if you have a big milestone ahead.

“I know that nobody everybody likes to think about the tax man,” The Money Coach’s Khalfani-Cox says. “But it’s often the case that you can save yourself a lot of money in the following year or better plan how to get ahead by being strategic during the last quarter and certainly the last month of the year. So, anything that you can do before the end of 2018, by December 31, that can lower your tax bite with Uncle Sam is definitely time and effort and money well spent.”

8. Whatever your decisions are, be intentional about them

At this time of year, you’ll be getting a lot of opinions on what you ought to do with your money — including pressure from family members.

But only you know what you want. So, while spending pressure may be overflowing this holiday season, consider what you really want to achieve. Perhaps that means making gifts, instead of buying them, to avoid overspending. But prepare to be courageous — your verdict may very well go against the social norms of your circle at an emotionally charged time of year.

“Everyone has different ideas of what the holidays should be,” Amy Jo Lauber, CFP and president of Lauber Financial Planning. “Love and family and friendship and relationships and money, everything gets all tangled up at this time of this year. So, it’s hard to kind of keep your footing. … Come January, you don’t want to be completely blindsided and you don’t want to be full of regret. Regret is a very expensive emotion. I would want everyone to do things intentionally whatever they decide to do.”

Ash Exantus aka Ash Cash is one of the nation’s top personal finance experts. Dubbed as the Financial Motivator, he uses a culturally responsive approach in teaching financial literacy. He is the Head of Financial Education at BankMobile and Editor-in-Chief at Paradigm Money. The views and opinions expressed are those of Ash Cash and not the views of BankMobile and/or its affiliates.

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American Are Wasting Money + How to Become a Smart Saver

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New cars, spacious homes, and morning coffee are some of the top ways Americans waste money, according to financial experts. The criticism comes at a time when 29% of Americans say they have more credit card debt than emergency funds, up 8% from 2018. Young Americans aged 18-29 have a combined debt of $1 trillion, and demographics show steady increases before petering out, with 60-69 year-olds in debt totaling $2 trillion.

So how do you become a smart saver? The best way to do so is to cut your expenses in ways that will bring more money to your bottom line. The following are tips on how to save money:

1- Stop Shopping at Convenience Stores.

Convenience stores are notorious for marking up the price on items significantly compared to grocery stores. If it isn’t worth the hassle to go to a grocery store, you probably don’t need it anyway.

2- Avoid Late Fees When Paying Bills.

Pay your bills on time so that you aren’t charged that unnecessary extra amount. If the problem is a lack of organization and forgetting the dates, use a reminder service like Google’s calendar feature that can send you a text or email to let you know when due dates are approaching. If you are worried about not having enough funds, call ahead and see about changing the due date or getting an extension.

3- Save Your Change.

Make it a habit to keep all that pocket change in a jar. Use cash to pay for most things and instead of trying to give the right change, only use the bills. When you get home, drop that coinage in a jar and let it accumulate. You will be surprised at how quickly it adds up.

4- Carpool as Much as Possible.

You can be doing yourself and others a lot of good when you decide to travel together. It might not be as convenient, but it can help in the long run. Carpooling to work or taking the kids to school are obvious ones to do. You can also get to know your neighbor and coordinate shopping trips.

5- Buy Used or Discounted

You can find a decent collection of clothes and other needs if you will buy used or at discount stores. Shopping at consignment shops or Goodwill will provide you with some good options. Discount stores like TJ Maxx or Marshalls are good places to find good designer clothes at a low price. Yard sales are good places to look for things that you need for the home. Discount food stores will give you the most value on food products. The names of the brands may not be familiar, but you won’t notice much of a difference in taste or quality.

You can find many more ways to save money, but the keys are to get organized, be disciplined, and learn to sacrifice. There won’t be many how to save money tips that will save you much money on their own, but using several together will net you the results that you want.


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Amazon Is Helping People Build Credit + Credit Knowledge to Keep You on the Right Track

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Amazon is opening up its rewards credit cards to people with no or bad credit. The tech giant and Synchrony Financial are launching “Amazon Credit Builder” for people who don’t qualify for the company’s other reward cards. The cards will offer Prime customers 5% cash back on Amazon purchases, with the person’s credit limit equal to the size of the deposit they make before receiving their card. Since 11% of the U.S. population have credit scores below 550, the move could increase Amazon’s customer base, says CNBC.

This seems like a good move for those who are unbanked or underbanked, but without being of how to manage or maintain good credit, this effort might exacerbate the problem. Many people are aware of the important role the credit rating plays in their lives. However, understanding what goes into a credit score (the credit score breakdown) might present some difficulty. There are several different methods of scoring, but most lenders and banks rely on the FICO method that has been in existence since the 1980s when it was developed by the Fair Isaac Corporation. The three prominent credit bureaus (TransUnion, Experian, and Equifax) all worked with Fair Isaac to come up with the FICO algorithm.

Your credit score may be any number from 300 to 850. The average American falls at about 690, which is deemed relatively good credit. However, while this score should secure you a loan, it will not get you the very best interest rates on loan. In fact, 300-640 = Bad Credit, 641-680 = Fair Credit, 681-720 = Good Credit, and 721-850 = Excellent Credit. Excellent credit should be the aim.

Following is the credit score breakdown:

Payment History

The biggest chunk of your score (35%) is derived from your payment history. This score is influenced by how well (or not) you pay your bills on time, how many have been sent to collection agencies, bankruptcies, tax liens, etc. Keep in mind that missing a payment is worse than making a late payment and that being late or especially missing a mortgage payment is a bigger blow to your credit score than missing a credit card or utility payment.

Usage Ratio

The amount of debt you have (compared to the amount of credit you have not used) accounts for 30 percent of your score. Try not to max your credit cards out. In fact, it is recommended that you only use 25 to 50 of the credit that is available to you. A way to balance this out is to obtain more lines of credit and not use them. However, you do not want to apply for a bunch of credit cards all at once as this is marked against you. If your credit is in good standing, apply for a reputable card every six months or so and save it for a rainy day.

Length of Credit History

Fifteen percent of your credit score is based on how long you’ve established credit. This is common sense. The longer your credit history, the better your overall score will be. More data about your past leads to a more accurate prediction of your future credit worthiness.

Credit Mix

Having several types of credit will actually boost your score if they are managed well. This counts for 10 percent of the overall rating.

New Credit

As mentioned earlier, opening new credit accounts all at once will negatively affect your score in the short term. It’s also important that you are aware that your score can be lowered for too many “hard inquiries” about your status. A “hard inquiry” is one that you have authorized a lender to perform. If you are inquiring about your own score, this will not count against you.

Understanding what goes into the credit score breakdown is the first step in improving your score and what will allow you to design your score and begin you on the journey to financial freedom.

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Job Growth in the U.S. Slows down + How to Use Entrepreneurship as a Plan B

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Job growth across the U.S. took a big hit in May, with private payrolls growing by just 27,000, against the 173,000 estimated. The disappointing figures from ADP and Moody’s Analytics are the worst since March 2010, when the employment market posted a loss of 113,000 jobs. Small businesses with less than 50 employees were the worst hit in the most recent report, posting about 50,000 lost jobs. “Labor shortages are impeding job growth, particularly at small companies,” according to Moody’s Analytics.

With job uncertainty looming, it is time to sharpen up our skills, but it’s always a good idea to get your feet wet first before you fully jump in. As always, we are here to help. Here are some ways to get you started as an entrepreneur:

1. Sell your good-quality, unwanted items.

Since one person’s trash is another person’s treasure, consider selling unwanted items on eBay, Craigslist or other similar sites—it is a great way to begin learning about entrepreneurship. You simply have to take all the stuff that you have laying around the house that you don’t need, and sell it. You’ll learn how to price your items, ship them, and many times how to negotiate.

2. Sell freebies from Craigslist.

Continuing in that same vein…what if you want to keep everything you have? Or what if you just don’t have anything to sell? Well, selling freebies from Craigslist is a great alternative. Just look for free stuff on Craigslist. Some items are in great shape. But if they’re not, spruce them up and resell them either on Craigslist, at a flea market or a garage sale.

3. Sell yourself (not that way).

Fiverr, Elance, Craigslist gives you a platform to sell your skills. Have a beautiful voice? Create personalized phone greetings. Are you a wiz at editing videos? Do it for others. Are you knowledgeable about design? Create a logo for someone. The list is endless.

4. Teach classes online.

Teaching classes online is actually a very lucrative business if you can find your voice and audience. How lucrative? It’s a 100 billion dollar industry! If you are particularly good at something, you can create online courses on Udemy or start your own online school using teachable.com or thinkific.com. Though top experts use this as a worthwhile way to earn residual income, everyday Joes and Janes use this as a way to sell anything from how to knit to their mobile app development expertise. Don’t know where to start? As you can see, there’s a class for that.

5. Offer to watch children.

Another way to start your journey as an entrepreneur is to hit up mom and dad. No, not your mom and dad. I mean parents who are busy professionals with small children. They may have to strain to remember the last time they were able to go to a restaurant or spend some quiet time with their significant other. Offering to watch their children can give you a head start on creating your own business as well as a valuable lesson in patience.

6. Become a brand ambassador.

Lastly, becoming a brand ambassador is a great way to not only get your feet wet in business but your knees and thighs too. Whether you have a small or large social media presence, you can use your influence to promote brands and get paid for it. (Make sure you’re only aligning yourself with brands you believe in). Doing this will give you an inside look into how established businesses (and even start-ups) want to portray themselves to the public.

While there are many other ways, those mentioned above are just some to get you started. What are some ideas that you may have? I want to hear from you. Leave a comment below and let me know how you believe that you can start your journey as a business owner/side-hustler.

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