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How to Save Up for a New Car (Part II)

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The safety features of a car are one of the main priorities when considering which car to buy.

Consider Safety and Fuel Economy

We should all be concerned about car safety. But, parents of young children must be completely informed about safety. You can see safety records online. Also, you can find out which auto models are most and least often stolen, which can alter insurance costs.

Fuel mileage is vital to most consumers. Though, since so many folks want vehicles that are more budget-friendly to drive, models with high gas mileage usually are high though they could retain value better than less fuel-efficient models as well. If you drive 20,000 miles per year, you can save around $2,000 per year on fuel costs by picking a vehicle that gets 35 miles per gallon compared to one that earns about 20 miles per gallon.

Insurance Costs

A new vehicle costs more to insure than the same model used. With new cars, you’ll pay more for collision and comprehensive parts of your insurance policy. Many folks forego this coverage on old “beater” cars, where the cost of coverage is greater than the payout for these repairs, but for new cars and newer used cars, you ought to have both comprehensive and collision coverage in addition to liability coverage.

Cars with low theft rates and good safety records tend to keep insurance costs lower. But insurance costs differ according to other factors than just the model, make, and year. For instance, folks in different cities, and folks in different neighborhoods within the same city might have different insurance rates on the same vehicle.

Budgeting for a Car

There are numerous things you can do to make it easier to pay for your vehicle. If you plan on trading in, think about selling the car yourself and using that money toward the cost of the new automobile. Selling directly usually gets you more than you would with a trade-in. Using a budget app lets you make progress quicker by establishing better saving and spending habits.

 

How to Save Up for a New Car (Part I)

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Cars come with a hefty price tag.

Cars are costly. According to research, the average cost for a new automobile was over $31,000. And used car prices are costly too. Research predicts the average used the car up to eight years old costs over $15,000.

In fact, after rent or mortgage payments, car loan payments are the next largest monthly budget item, so it’s vital that you understand how much for a vehicle you can truly afford and shop appropriately.

The cost of a car is just the baseline. Also, you will need to figure in insurance costs, sales tax, registration fees, and finance charges if you cannot save up and pay cash for a vehicle.

If you’re purchasing new, your warranty has to cover numerous big repairs for three years or so, but it won’t cover maintenance such as a new battery, oil changes or new tires or windshield wipers. With numerous used cars, you won’t get a warranty. You must be confident that the model you pick will have low-cost repair costs. Use a budget app to budget for a vehicle.

Car Loans

If you can save up to pay for an automobile with cash, you won’t pay finance charges and you won’t have a car payment every month. Though, most folks have to borrow to buy a vehicle. Even if you plan to get a car loan, you should use a budget app to help you incorporate the cost of the car into your monthly budget.

If you have a car loan, it’s solid if you can make a 20% down payment. If you can’t do 20%, you should possibly think about getting a cheaper car, or wait until you can put 20% down. A down payment under 20% puts you at a big risk of becoming “upside-down” on your car loan, where you owe more than the vehicle is worth.

The Importance of Having an Emergency Fund 

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Your emergency fund can cover your expenses if you lose your job unexpectedly.

Your future self will thank you for creating an emergency fund now. It’s vital to set aside emergency savings can help you get in case your home requires an emergency repair or something more serious such as losing your job.

Having an emergency fund is one of the most critical things you can do. It’s part of adulting. Your savings must be able to cover your big expenses for three to five months.

Having a solid emergency fund gives you peace of mind. No one wants to live from paycheck to paycheck and not being able to pay the rent or a car repair away from not being able to get to the j-o-b.

It also offers you freedom. If you decide to leave a relationship or your boss gets so unbearable that you have to leave before finding another job or you want to go back to school or begin your own business, having an emergency fund gives you the freedom to do these things.

Keeping that money apart from the money you use to pay bills can help curb frivolous spending.

Sometimes when you see a huge number in your checking account you get a little big-headed a little more irresponsible Keeping the money separate can help you evade temptation.

What is an Emergency?

You must only dip into your emergency funds for a true emergency, such as to keep yourself afloat between jobs, for an auto repair, a medical expense, or a home repair. You can’t use your emergency fund for things such as a shopping spree, to buy a new cell phone or laptop, or to go on vacation.

How Much Should You Save?

Your emergency fund has to be 3-5 months of expenses. That sounds like a lot and it is but remembers, that number can be your bare-bones cost. If you were to lose your job your spending would be different than it is when you have money constantly coming in.

 

Reasons to Have a Piggy Bank

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In an effort to encourage all to save, we want to showcase one of the simplest, convenient ways to save: the piggy bank.

Piggy banks are a great way to save money from childhood all the way to adulthood.

Each person gets a piggy bank at some point in his or her childhood. It’s one of the most efficient ways for parents to teach their kids the value of saving money instead of spending it. More importantly, the piggy bank is also a great reminder for parents and young adults who might have failed to recall the significance of saving.

Here are the reasons why everyone, young or old, must have a piggy bank:

It helps keep loose change. Rather than losing all those nickels, dimes, and especially pennies under the couch cushion, in the bottom of your purse, hold onto them and put them inside a piggy bank. Not only will this aid in cleaning up the car and house, but it will also further strengthen good money savings habits.

Sets a great example 

Piggy banks are an effective and easy way to teach children about the importance of saving. They may not be saving up for a huge purchase, but they might want to save up for something, whether it’s a new toy, a new bike, or new clothing. Teaching them the advantages of using a piggy bank will go a big way in the future.

Reinforces “Always Be Saving” 

Saving should constantly be top of the mind when it comes to money. As the saying goes, “a penny saved is a penny earned.” It doesn’t matter if you’re putting some of your pay into a savings account or putting change into a piggy bank, every little bit helps. With a piggy bank, you’re able to see your money increase every time you save. This is a good habit to keep even throughout your adult life.

 

The Cons of a 529 Plan

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While there are advantages to using 529 plans as an investment for college funds, there are some huge cons to consider:

While 529 plans are a great idea to help save up for your child’s college, they have some disadvantages too.

You have to use the money for college
If you don’t use the money you invest in a 529 savings plan for college tuition, you will be penalized when you take out the money to use it for something else. Also, both your state and the federal government will tax the earnings on your account in your present tax bracket.

It could affect your financial aid eligibility
Currently, financial aid eligibility isn’t disturbed much by 529 plans, college savings plans or pre-paid tuition plans since these plans are thought to be part of the parents’ assets in the calculation of the Expected Family Contribution (EFC) toward college costs.

Your investment options are limited
Even though your 529 savings plan is tax-deferred, you might give up the chance to change your mind about where to invest your money. Meaning, if you discover a mutual fund that is growing more in interest than your 529 plan and desire to move your money, then you will be subject to a penalty.

Your investing window may be tight

Many plans have an all-in-one fund that’s just like a target-date fund. It’s created to own more stocks when your child is young and more bonds and cash equivalents, such as money market mutual funds when he or she nears college.

If you have a late start, you could find yourself stuck in a close investing time frame.

Put off saving until your child leaves daycare, for instance, and you’ll have just around 13 years to grow a college fund.

Since you’ll need to get into asset-preservation mode six to seven years before the child starts college, you’ll honestly have only around five years on the front end to put in your portfolio higher-yielding stocks or CDs.

 

The Pros of a 529 Plan 

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Before you invest in any sort of college savings plan, you might want to consider the pros and cons that it provides. The information here could help you as you consider using a 529 plan to have college funds for your child.

The benefits of a 529 plan

Here are some good reasons to invest in a 529 college plan for our child’s college fund:

529 College Saving plans are a great way to ensure that your child can get a good education.

529 plans are tax-deferred investments
When you invest in a 529 college savings plan, your withdrawals will probably be tax-free. It’s always smart to check IRS Publication to be sure. Until now, this tax-free provision was made to expire in 2010, but, thanks to current changes to the law, it seems to be an advantage that will be around for years.

Your account grows interest
529 plans work like mutual funds. Some states’ plans might work differently, but most invest your money in stocks and bonds in the chance that it will grow faster than a regular bank savings account. Most plans do a very solid job of managing your money.

An automatic investment option
Many plans provide an automatic investment choice which lets the 529 college plan take out a certain amount of money every month from your checking or savings account. You decide the amount and better yet, you get to enjoy hands-free investing that aids in preventing you from spending your money on something else. You will have money in the bank!

You can contribute as much as you want
College savings 529 plans let you put in as much money as you want. Pre-paid tuition plans, sadly, do not. They limit the amount of money you can put in annually the same as an IRA. While unlimited savings sounds wonderful, be cautious not to put yourself into a corner by saving too much.

 

 

Cut Costs and Save Some Money Every Month

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Want to take control of your money? By making a few little changes, you can begin now with a plan to get your spending and savings back on track.

From cable bills to everyday spending habits, these tips will aid you to save more, reduce spending, and get on the right track to financial success!

Have Goals

You might feel that first on our list should be the well-known New Year’s resolutions we’ve become so used to every year. But since New Year’s resolutions tend to flop by January 2nd  every year, goal setting is a much better choice.

Establishing goals is a habit for folks who win with money, and it should become a habit for you as well. Research has shown that just by having a goal for something it gets you closer to that goal instead of not having any goals at all.

A critical part of this equation is ensuring your goals are specific, measurable, attainable, realistic, and time oriented. Yes, SMART! Once you have a goal in mind that has all these attributes, slice your goal into little pieces or milestones that you can hit more simpler. Once you get to each milestone, rejoice. This will aid in encouraging you as you go forward toward your financial goals.

Also, jot down your financial goals and place them in an noticeable place so you see them often, like on your mantle, refrigerator, or front door.

Negotiate prices

Did you know that you can negotiate a price in nearly any kind of buying situation? Make your money work for you the right way!

Though you might have formerly thought negotiation was only for big purchases like cars and homes, you can also negotiate online and at retail stores. You can even negotiate to get your bills reduced.

How Much You Need to Retire at 55

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If you would like to retire at age 55, there are a couple of things you will need to think about that a person who retires later will not have to consider. Below are a few things to consider if you are serious about planning for an early retirement.

Longevity

If you retire at 55, supposing you will have an average life expectancy, your assets need to produce income for a longer period than a person who retires at 65.

It means you need to create an exact projection of what you think you will spend yearly. Then you can compare that to your income sources for retirement you feel you’ll have ready for you.

Social Security doesn’t begin until age 62. Also, there are restrictions and penalties for getting to your retirement money before 59 1/2 .

What this means is that if you want to retire at 55, you must have money or have a way to get it. One source of money won’t cut it. One choice you might think about is using 72 payments to take out from your IRA.

Medicare coverage won’t begin until 65. If you are thinking about retiring at 55, make sure you will have a solid health insurance coverage that you can depend on until you can get Medicare.

Filling Up Your Time

An long vacation sounds nice, but some find it isn’t as satisfying as they thought it would be. When considering early retirement, give real thought as to what you’ll do with your money and your time. Getting serious about a hobby or consulting are ideas.

You could volunteer or help raise the grandchildren. If you decide retiring at 55 might not work for you, move the age up to 62. For many, this is doable. Just make sure that you are emotionally and financially ready when you decide to do so.

The Top Budgeting Apps

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We all realize that keeping your budget balanced can not only aid you staying on track financially, but can also lessen your stress when it comes to your lifelong financial health. But if your system is a untidy folder of receipts or wads of cash in numerous wallets/purses, it may be time to rethink your strategy.

If your attention is more on saving your money and counting each penny, there a plan for that as well. There are many ways to save and it’s not just about clipping coupons or keeping tabs on your bank account with your bank app. There are savings apps for anything from investing to personal budgets to customize savings plans.

Here are some of the top money management apps, spending trackers, budgeting apps, and other financial tools for managing money. You can have a better handle on your daily, weekly, monthly, even yearly spending practices. Read on a gain back control of your finances.

If you’re still figuring out how to make a workable financial budget for your income you’re your lifestyle, these tools could change your mindset. A few may even increase your net worth.

Top Picks

  • Mint.com
  • BillGuard
  • The Rest of The List
  • The Birdy
  • You Need a Budget
  • Adaptu
  • HelloWallet
  • GoodBudget
  • Mvelopes
  • Pocket Expense
  • HomeBudget
  • Expensify
  • Level
  • Unsplurge
  • Toshl Finance
  • FamZoo

Mint.com is a fan favorite when it you talk about money managing apps. It assists in managing your saving, budgeting, spending, and earnings. It can even combine all your accounts, including you IRA and 401K.

BillGuard is another great money management tool and a fan favorite. This well-known budgeting app has two key purposes: to aid you in totally recognizing your spending habits and to protect your credit cards from falsified charges, two very crucial goals when it comes to trailing your spending.

Choosing the Right Financial Advisor

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Planning is key!

You finally want to hire a financial advisor. You know this is a vital decision, but you have no idea where to begin. The amount of financial information available is endless and getting started can be frightening. But the process can be easy if you divide it into steps.

Selecting an advisor type:

Almost anybody can refer to themselves as a financial advisor. Let’s begin by reducing the field. There are three basic types of advisors according to how they are paid: commission, fee-only, and fee-based.

Commission: Commission-based advisors (insurance agents, registered representatives, brokers) sell financial products like mutual funds, annuities, insurance and mutual funds, getting commissions on those products. They are often working for big financial institutions and have their Series 6 or Series 7. Because what they are paid is based on what they sell, there is a huge conflict of interest. It’s critical to be aware that the temptation of commission is there and it can play a part in their recommendations for you.

Fee-based: These advisors are somewhat new to the financial industry. Fee-based advisors are usually associated with a broker/agent and like the commission-based advisors, usually hold a license to sell insurance or investments for a commission. Fee-based advising is complex because like the fee-only advisor, the fee-based advisor offers financial planning for a fee. However, the vital difference is they also sell products and get paid commissions. So, there is still that big conflict of interest, because their fee-based recommendations could, and typically do, include buying products they get commissions on.

Fee-only: This is the only type of advisor recommended for complete financial planning and/or asset management. Fee-only advisors possess a fiduciary duty to work in the best interest of their clients. They only make money through hourly rates, flat fees, or a % of the assets they manage.