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Fine-Tuned Finances

Make Your Wallet Run Like New Again

Roth IRA: How To Get Started

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Saving for retirement is an important aspect of financial planning. While the need to save toward future expenses is indisputable, many people find themselves overwhelmed by all the options available. Deciding which retirement plan is right for you is based largely on your current financial situation as well as long term savings goals. A popular choice for qualifying wage earners is the Roth IRA. Here we look at how you can get started saving today by opening a Roth IRA.

Choose a Provider

To get started you must first decide where and with whom you will open your account. You can choose from banks, insurance companies, brokerage firms and even online brokers to open a Roth IRA. When comparing providers consider fees associated with opening and maintaining the account as well as investment choices available and flexibility in terms.

Determine Investment Strategy

What type of investments do you want in your Roth IRA? A popular strategy is using mutual funds and index funds to invest in stocks. Other options include but are not limited to; real estate, cash, commodities and bonds. If you are unsure which investments to choice, consider talking to a financial adviser to learn more about each option. The strategy you use when selecting investments will be based largely on your own risk tolerance and financial goals.

Contribution Considerations

The IRS limits the amount of money that can be contributed to retirement accounts each year. If you are under age 50, the maximum amount of contributions allowed annually is $5,000. This is the total combined amount, regardless of the number of IRA accounts you may have. Persons age 50 and older can contribute an additional $1,000 per year. Knowing these limits, you can determine how much you will be contributing to your Roth IRA. Making the maximum allowed contributions is advisable to take full advantage of tax free growth opportunities. Check with your provider to determine if there are opening deposit requirements. You may also want to inquire about setting up an automatic withdrawal plan. This would allow for money to be automatically withdrawn from your checking or savings account and deposited into your Roth IRA account. Automated plans can make it easier to manage your contributions while at the same time ensuring you are saving enough throughout the year to reach your savings goals.

Open your Account

To open a Roth IRA, you must provide your social security number, employment information and bank account information. The process itself is very similar to opening your standard checking or savings account. By doing all of the time consuming work in advance, the total time required to open your Roth IRA is normally between 15 and 30 minutes.

What to Do With Too Many Credit Cards

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If you’re like many people, you have several credit cards in your wallet. If you have a balance on several cards, chances are you have too many credit cards to manage effectively. The interest is eating a lot of the payments you send in each month, and the more cards you have the easier it is to lose track of how much debt you really owe.

You could improve your financial situation by reducing the number of credit cards you use to about two: one for your regular use, and another as a backup card for emergency use.

Reduce Credit Cards to Simplify Finances

Take a look at each of your credit card statements to find out how much you owe and how much interest each card is charging you. You will probably find you’re paying an average of 15% interest on your credit card balances.

If you can get a 0% balance transfer card with a limit high enough to transfer all of your other cards to it – this will help you consolidate your credit card debt and pay it off faster. Instead of paying 15% interest, you’ll pay no interest! You can then focus on sending as much money as you can each month to start eliminating that debt.

If you are unable to get a new card with a large enough credit limit to move all of your credit card balances to, at least transfer the balance from your highest interest rate card(s) onto a low interest or 0% balance transfer card. Send as much as you can to the card with 0% or low interest, since more of your payment will go toward the balance and you can get it paid off faster, while paying what you can on each of your other cards.

When you pay off the balance moved to the 0% balance transfer card, or the low interest card, you can look for a new balance transfer offer to consolidate your remaining credit card balances. Repeat this cycle until all of your credit card debt has been repaid, being careful not to add new debt to your revolving credit accounts while you are paying off your previous purchases!

When you consolidate multiple credit cards into one – you only need to make a single payment each month. When you choose a 0% balance transfer offer, all of your monthly payment will go toward the debt you owe and none toward interest, which helps you get out of debt faster.

Eliminate Risk of Late Fees

An additional benefit of reducing the number of credit cards you have is reducing the potential of sending late payments. It’s much easier to keep track of one or two accounts to pay than it is to keep track of five! When you consolidate multiple credit card accounts on a 0% balance transfer card you don’t need to remember five different credit card due dates and you have much less chance of sending your payment in late. For every late payment you avoid, you save an average of $39.

About the Author:

Jeff Weber writes about saving money and reducing credit card debt with balance transfers at SmartBalanceTransfers.com, a website designed to educate consumers about 0% APR balance transfer credit cards.

Making the Switch to a Credit Union

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Most people would experience advantages if they switched from a traditional bank to a credit union. Here’s what you need to know before you try to make the switch:

Are You Eligible for a Credit Union?

In recent years, credit union membership has become available to more people but not everyone will be eligible for credit unions. There are credit unions available to employees of a particular business; credit unions for people who live, work or worship in a certain geographic area, and credit unions available to people working in certain industries. Check the credit unions in your neighborhood first to see if you meet eligibility requirements, and if not – look for national credit unions available online if you don’t mind online banking.

Other ways to become eligible for a credit union membership is to become a member of an organization or group in which membership makes you eligible for the credit union.

Credit Unions are Nonprofit

One of the reasons most people will benefit from switching to a credit union from a bank is because credit unions are nonprofit organizations. This means that they aren’t paying federal taxes like banks do – and they can pass on those savings to their members in the form of reduced account fees and better interest rates.

Account Holders are Partial Owners at Credit Unions

Another difference and benefit credit unions have over banks is that when you open an account with a credit union, you become a partial owner. You can vote on Board of Directors, and you will receive a share of profits generated from their operations. Loans and fees earned by a credit union is distributed among all of the owners – which means every once in awhile you’ll see a credit in your checking or savings account that represents your percentage of ownership.

Compare the Account Features

Take a look at the features of your current checking and/or savings accounts and see how they compare to what the credit union you’re considering offers. Will you miss any features your bank offers that isn’t provided by the credit union? Most standard banking services are also available at credit unions, like debit cards, transferring funds between accounts, direct deposits and online bill pay.

If you decide the credit union offers the features you need, you should open an account and make the switch!

What to Do if You Can’t Pay the Taxes You Owe

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Tax preparation season is well underway. If you have recently had your taxes prepared and found out you owe money and have no means to pay, what should you do? This is a question many people are faced with every year. First, don’t panic. There are some steps you can take that will help you pay back what you owe.

The most important thing you can do is to still file your taxes by the deadline. When you file your taxes you should include a check for whatever you can pay. Even if you can’t pay one cent however, you still need to file on time to avoid a steep penalty fee for late filing.

After you have filed, in approximately 45 days you will receive a bill from the IRS with calculated interest for the balance of what you owe. For some people this 45 days in enough time for them to come up with the money. Some people just need a few extra pay checks and if that is you, waiting for the bill is an ok option. If you know you will still not have the money in 45 days you will need to determine how you will be able to pay off your balance.

First, determine if you have any means to get the money. Some people will use resources that they normally would not like to. Can you take a loan out of your retirement, cash in sick or paid time off at work, cash in a mutual fund or take a line of equity out on your home? If you truly do not have a resource to get the money, your next best bet is to file an online payment agreement on the IRS website.

According to the IRS website, if you owe $25,000 or less in combined tax, penalties and interest you can apply for an installment payment agreement. Most people can file right on line and will receive information on approval in about 10 days. Sometimes you will need to call the IRS directly to get approved. When you fill out the application you will have two options to apply for. The first is for a 120 day extension. You should use this option if you know that within 120 days you will be able to pay in full.

If you know you will not be able to pay in full within 120 days then you should apply for the second option. The second option will set you up with a monthly payment plan and money can be taken right out of your checking account. There are some fees involved with this option and they do vary by income.

If your situation is dire, you may also be able to qualify for an offer in compromise. These are rarely given, but do allow a tax payer to settle their amount owed for a lesser sum. You will have to show true hardship and the IRS will only accept such a plan if they believe there is no other means for you to pay back what is owed.

How to Comparison Shop to Save

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Comparison shopping is when you look at a product that you plan to purchase and compare the price of the same or similar product at different stores or locations. You then purchase the product where you can get the best bargain. You can price compare just about everything from your groceries to a new vehicle, children’s toys to finding a hotel for you next vacation. Avid bargain hunters know just where to look to find the best deals. Here are some tips to get started:

One quick and easy way to comparison shop is to look at the store’s specials. For example ,you can look at several different advertisements for grocery stores in your area before you head out to do your shopping. You can then choose the store that has the best bargains on the items you plan to buy. Many bargain hunters will even stop at multiple locations, picking up the items they need that are on special in each store.

Looking at advertisements is another great way to begin to price compare for bigger ticket items. If you are looking to buy a television set, a washer or lawn mower for example, you will want to seek out ads for the stores that typically carry these products. You can check out the items that are on sale that week, comparing cost to the product features. Many times, with these types of items, it is also a good idea to visit the stores to take a look. Some stores will even haggle with you on the price. As an added tip check to see if there are any other bargains to be had. Sometimes if you open up a store charge account you can get an additional discount.

Purchasing a new vehicle is another place that bargain hunters price compare. In this case it is usually best to visit different dealerships to look at the vehicles, decide on features and price compare. Once you have decided on a particular make and model to purchase you can then make the sale at the dealership that will offer you the best bargain.

Price comparing for vacations is also a great way to find a deal. If you are planning a trip, whether you are looking for a hotel room, a luxury resort or even a cabin on a cruise ship, bargain shopping can save you money. It is very easy to compare prices on the internet for these services and many travel websites compare prices for you.

Bottom line, you don’t need to pay full price. With a little bit of time and effort you can learn to bargain shop and save a bundle.

Free or Low Cost Family Fun Activities

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You do not have to spend a lot of money to have a fun filled day or evening with your family. In fact there are countless activities that you and your family can do together that are free or cost very little. Let’s take a look.

  • Visit a local park or playground if you have young children.Let the kids have fun on the playground equipment. Take along a soccer ball, basketball or other sporting equipment to keep you entertained.
  • Find a nature area or preserve and take a family hike together.Bring along a picnic lunch and enjoy all that nature has to offer.
  • Dig out everyone’s bicycles and head out for a bike ride. Most areas have bike paths that are great to ride on.
  • Check out local area beaches. Sometimes there is a small fee for entry. Make it a full fun beach day.
  • If it is winter time and there is snow on the ground, pull out the sleds and find a park in your area with a hill. If you have young kids even a small hill will be loads of fun.
  • Head out in the snow together as a family and make snow angels and snowmen. After the outside fun head back inside and make hot chocolate together.
  • Have a camp out in your back yard.
  • Have a family game night. Pull out the games from your game closet, dust them off and take turns choosing which one to play. Your family can have hours of fun playing your favorite games together.
  • Head to your local library and check out books to read and movies to watch together. Most libraries carry a nice selection of family movies. Head home, pop some popcorn and watch a movie together.
  • Pull out family photos to look at together or take out the home videos. It is always entertaining to take a trip down memory lane.
  • Have a family pajama party.
  • Take time to make a fun meal together. One idea is to make homemade pizza. It is pretty easy to make and fun to eat.
  • Do a jigsaw puzzle together.
  • Call your local museums and see what programs they offer. Many times local museums offer free or low cost family programs.
  • Keep an eye on your local papers for fun festivals, area events or other family fun activities that may be free of charge.

Tips to Start Living a Frugal Lifestyle

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Many people today are looking to find ways to trim their bills and live a more frugal lifestyle. You might be surprised by how many little things you can do that will make a big difference. Here are some tips to get your started.

Use your local library

Your local library is a gold mind and most people don’t know it or just don’t take the time to take advantage. Free books, free movies and free programs, what could be a better way to trim spending? Instead of buying books, borrow them. Instead of paying money for movie rentals and premium movie channels, borrow them for free at the library. Many library systems even have first run movies. You may not be able to get it the day it comes out, but hey if you can see it for free by waiting a week or two, it is worth it.

Clip coupons and shop sales

Using coupons and shopping sale items can cut your weekly shopping bill by 25% of more.

Grow your own food

Starting even a small garden can help save you money and have the added benefit of healthy eating. If you have the space to grow a larger garden you can freeze and can your own food for the winter months as well.

Don’t eat out on a regular basis

Most people eat out at least once a week and many people more than that. Make eating out a special rare treat. Eating out just once a month can really trim your budget.

Pay your bills on line

This will not only save you the cost of the stamp, but also the gas to get to the post office. Time is also a big savings with this tip.

Find Freebies

There are so many great freebies out there that most people just aren’t aware of. When eating outing check for restaurants that offer free kids meals and free meals on birthdays. Check your local newspapers for events and activities going on in your area that are free. You can also find other great freebies on line, if you just do a little searching.

Save on your utility bills

Washing all of your clothes in cold can make a difference. Turning off lights in rooms as you are not using them is also a money saving tip. Keeping the heat set even at just a degree lower can show a savings. Finally, add extra covers to your bed and turn your thermostat lower at night, then watch your heating bill dwindle.

Tips for Breaking Your Spending Habit

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If one of your New Year’s resolutions for 2010 is to cut your spending habit, here are some tips to get you on your way.

Switch to Cash

Leave your credit cards at home and switch to spending only cash. When you can only spend cash you are limited to what you have on hand, helping you to keep your spending under control. When you rely on plastic, it is very easy to add extras to the cart knowing that what you spend can be virtually unlimited. After all you can spend today and not worry about it till later. This can be a deadly habit.

Learn the Difference Between Needs and Wants

Before making purchases stop and determine whether or not what you are going to purchase is a need or a want. Think it through. By all means if it is a necessity and you have the cash, make the purchase. If however, it is just a want weigh the pros and cons. Before making the purchase decide whether or not you can truly afford it and what purpose the item will serve you. It is also a great idea to sleep on any purchases that are not necessities. Sometimes when you have given yourself a chance to think about it, you realize you really can live without the item.

Make a List and Check it Twice

Never shop without making a list first. It is so easy to randomly throw objects into your cart as you go through a store. Before you know it you could have dozens of items that just aren’t necessary. Before heading out to shop, especially for groceries, determine what you need and write it down. Once you are in the store, stick to purchasing only what is on your list.

Keep Better Track of Finances

Keep a Debt Diary. Write down every dollar that you spend. This way you can see where your money is going. Then total it. It can be amazing to see how easy it is to spend hundreds of dollars each month on needless purchases like coffee to go or lunches on the run. When you see it in black and white it is much less tempting to make those purchases.

Don’t Skip Entertainment

Finally, give yourself some play money. Each week or month make a dollar allotment that you can spend how you see fit. Whether it is $10.00 or several hundred, depending on your means, you can blow that money any way you like. Just know that once the money is gone you are done for that time period. Knowing you have this fund will help you to stay away from extra spending.

Reducing Your Grocery and Utility Bill

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As the cost of everything on the planet increases, people are finding it difficult to stay afloat financially. Saving money has become increasingly important in most households. Here are some easy methods that you can use to reduce your grocery bill and your utility bill.

Saving Money at the Grocery Store

You can potentially save hundreds of dollars per year by using grocery store coupons. It’s possible that you’ve been stuck at the checkout line of the grocery store behind someone who is fumbling with a stack of coupons. However, you can potentially save hundreds of dollars per year by using grocery store coupons.

Purchase generic products instead of name brand products. Many times people can’t even tell the difference between a store brand and a name brand product. The only major difference is the price tag.

Make a grocery list and stick to it. Many people often go to the grocery store not knowing what they want to buy, and they end up purchasing items that they don’t really need. Making a definitive list will ensure that you don’t end up impulse-buying.

Saving Money on Utilities

If you have traditional incandescent light bulbs, you might want to replace them with fluorescent bulbs. The fluorescent bulbs use 75% less energy, and lasts up to ten times longer than incandescent bulbs.

Water heating is the third largest household energy expense. Lowering the temperature on your hot water heater can shave dollars off your utility bill. If you have plans to go on vacation, reduce the water heater temperature to the lowest setting. Washing clothes in cold water instead of hot or warm water will contribute to a lower utility bill as well.

Chances are you have appliances around your house that remain plugged in at all times. Some of these items soak up electricity, and you might not even know it. Unplugging appliances that have clocks like microwaves and coffee makers will help save electricity as well as a few dollars every month.

A clothes dryer is one of the most energy-consuming appliances in your household. A cheaper alternative to drying your clothes is to invest in a clothesline and start hanging your laundry out to dry. Sure, it’ll take more time, but your lower utility bill might be worth it. If weather does not permit, you can still hang your clothes to dry inside your home. Dry racks can be purchased at any department store.

Your paycheck can quickly dry up courtesy of inflating utility and grocery costs. Using some of these common sense ideas-coupled with a little sacrificing of certain luxuries-can help absorb the ever-growing price increases.