Xzjiudian.com – Finance Legal Professionals

How To Save 3-6 Months of Living Expenses

Most folks have heard the advice that you should keep 3-6 months of living expenses in an emergency fund in the event you lose your job.  In many cases, this seems like a mountain of a task.  For example, let’s say your net income is $3000 per month, this could equate to $9000 to $18000.  That’s a lot of money and those figures can really be difficult to attain for some people.  However, if something like job loss does happen, in most cases people can trim at least 25% off their budget so that number looks more manageable.

That being said, how do you get there?  Here are some tips to follow:

1.  Do not consider your IRA or 401K as part of this fund, except a ROTH IRA where you can withdraw the amount you have contributed tax free.  There are significant penalties for early withdrawal.  Instead, consider reducing your IRA or 401K contributions for a short period of time to help you boost your emergency fund.  Only do this for a short time.

2.  Look around the house for things you are not using and sell them.  With websites like EBAY or CRAIGSLIST, there is always the opportunity to turn that unused stuff into cash.  Put that cash in your fund.

3.  Hold a garage sale and put the proceeds in this fund.  Most people have old stuff in the closet and garage that would not be missed.

4.  Consider a part time job for a short period, especially during the holiday season.  From Thanksgiving to Christmas many retailers need extra staff for the evenings and weekends.  Or on Valentine’s day call a florist and see if they need delivery help.  Take a vacation day and work at a florist that day.

5.  Put your income tax refund to work as part of this fund.

6.  Most people can trim their budget in some areas, so look for those, even if it is temporary.  For example, if you have cable TV and spend $80 per month on cable you can probably reduce your service without penalty.  You can probably switch to the basic package for about $35 a month.  Do that for 1 year and you have an extra $540.

I am not saying that this will be easy and you will probably have to make some sacrifices to get your emergency fund in place.  However, if you read the newspapers or internet about the current unemployment rate, you will see how important this is.

Credit Card Education

credit card use onlineWe send our kids to college for an education, or we goto college for an education but often times while we are in the process of going to school, we cripple ourselves with credit card debt.

At any stage of your life, if you are in college or some type of higher education institution, chances are you are on a limited budget.  In many cases, the easiest option is simply to put most expenses that you seemingly cannot cover on a credit card.  This can be a huge mistake!

In many cases we see students leaving the confines of education now saddled with thousands of dollars of credit card debt that they must attempt to pay off.  Before you go down this common path and make this mistake, here are a few things to remember:

Live within your means – the first step to determining how to live within your means, is to define a budget.  A budget does not need to be complicated, it is simply your expenditures over a set period of time.  The easiest length of time to define a budget is monthly.  However, you do not want to forget about those expenses that occur annually or semi-annually, such as car insurance.

Track your expenses – it is easy to get into debt if you do not know what you are really spending.  In this day and time, it is easier than ever to track your expenses.  Most every credit card company and bank has a website where you can track your expenses.  Remember to take advantage of these services.

Pay your bills on time – Missing payments is bad for two reasons.  First, it can damage your credit score.  This is problematic because it can take months or years to repair it, and this makes it difficult the next time you try and apply for a credit card or another type of loan.  Second, missed payments usually mean late fees.  So, in addition to the credit card balance that you are trying to pay off, you now have late fees on top of that.  Usually late fees are higher than $20 per late charge, so it is easy to see why you do not miss a payment.

IMPORTANT:  Even the most diligent person may sometimes send a payment in late or even forget about a payment.  However, if you have a good track record of payment history, some credit card issuers may waive the late charge once as a courtesy.  If you miss a payment, and have a good payment history, it may be to your advantage to call the number on the back of your credit card and ask the support representative to waive the late charge as a courtesy, and they just might do it!

Reward yourself if you are successful – periodically you should assess how you are doing.  If you are not doing so well, it may be time to solicit some help or advice.  Perhaps a parent or friend can offer lend a helping hand or be a sounding board about your situation.  If you are doing well, and managing your purchases and debt, reward your success (within reason of course!)

Finally, remember to keep your budget within reason both on the low and high side.  While some debt is certainly acceptable while you are in school, do your best to keep it low.  Often times jobs are not as plentiful or high paying as you might expect when you complete your education, so be wise.

Keeping Your Identity Safe From Theft & Fraud

 Today, more and more people are becoming the victims of identity theft. It seems as if everywhere you turn someone is trying to gain access to your personal information. The effects can be devastating, causing you a lot of time, money and stress that you simply don’t need. Learning how to prevent identity theft is one of the best identity theft protection methods you can use. By being prepared, you can keep your identity safe and secure. The more people who know how to prevent being the victim of identity theft, the less someone else is going to be to commit the crime and steal their identity.

Preventing identity theft begins by managing your personal information sensibly and with caution. To keep your information safe and free from potential thieves, consider following the precautions outlined below.

Only Bring the Essentials

If you are traveling outside of the home, don’t take anything extra with you. Leave extra credit cards, birth certificate, passport and social security card at home. The least amount of information you have on you, the better it is going to be overall. If you don’t have anything on you that gives personal information out, the thief isn’t going to get very far when they attempt to steal your identity.

Don’t Let New Checks Come in the Mail

If you run out of checks and have to order new ones, don’t let them come to your mailbox. Let the bank know that you want to pick them up inside of the branch. Thieves are always scouring mailboxes in hopes of getting personal information from their victims. Your checks are the prime source of information for them to take control of your finances and rob you blind. By picking your checks up at the bank, you make it that much harder for them to be altered, stolen and cashed by the thief.

Exercise Caution When Giving Out Personal Information

When it comes to talking on the phone, exercise caution when providing anyone with personal information. Identity thieves will call posing as a government agency or bank in the hopes of gathering information from you.

To help prevent identity theft from occurring, don’t give out any information over the phone unless you are the one who initiated the phone call. By being the one to call the agency, you can rest assured that you are speaking to the right person. To help learn more about what you can do to protect your identity and avoid becoming the victim of an identity thief, contact the professionals at IdentityGuard today.  They are one of the top services to monitor your credit, and have affordable plans.  If you need a free solution, CreditSesame.com is worth looking into as well.

The Importance of Knowing How to Monitor Credit Score

Whether you are looking to buy a new home or a car, having a good credit score can make a big difference in the terms of your loan. A key to knowing when it’s the right time to make a big purchase is to utilize monitor credit score services.

You have heard the old cliché “Knowledge is power.” It’s a cliché for good reason: it’s true. When you know your credit score you have power. Whether that power is directed towards making improvements in your spending habits and income or the power to demand a better interest rate, you won’t have access to that power without knowing your situation.

Monitoring your credit score

The first thing you should know is that while you can access your credit report for free up to three times per year, you can very rarely find access to your credit score without paying a small fee. When you choose a Total Protection or Platinum Plan with Identity Guard, you receive access to your credit score free. So, unless you are subscribed to a plan that provides access to your score for free you will need to decide how often you want to check your score.

Most significant changes to your score will not show up for at least three months. Monitor your credit score three to four times a year to avoid frustration.

Understanding Your Credit Score

Monitoring your credit score is only part of the process. Understanding your score is at least as important as knowing what your credit score is. Essentially your credit score determines how worthy you are of receiving additional credit. Scores range from 500-850. The three credit reporting agencies apply different weights for your score, but there are essentially five things that determine your credit score: debt, length of credit history, types of credit, new accounts and payment history. The combination of these things determines your credit score. The worst credit scores fall between 500 and 579 with the best falling between 700 and 850. Typically scores above 600 are considered lower risk so aim for a score higher than 650 to increase your odds of favorable loan terms.

Taking action

Now that you know what your credit score is and where you stand, you should have a better idea of how to proceed. If your score is above 600 you will likely qualify for average to good interest rates. If your score falls below 600 or in the low 600s you may want to take additional steps to increase your score. For maximum benefit to your credit score: pay your debt on time and pay off as much debt as possible (specifically credit card debt).

Tax & Estate Planning Tips

While no one likes considering the prospect of his or her life ending, it is prudent to protect your assets and minimize tax issues subsequent to one’s death. While a simple document allocating funds and assets may seem like a viable option, without the proper education about tax and estate planning in California, your property and funds may become more of a liability than an asset to your loved ones.

Improper estate and tax planning can cause a multitude of unforeseen problems. In some cases, the entire estate can go into probate court and divided as they see fit, with a majority of your assets allocated to the government. This means that the beneficiaries you have worked so hard to provide for may walk away empty-handed. Further, with a stranger interpreting the intentions of your will, your beneficiaries will not have the legal power to claim what is rightfully theirs. Huge portions of your estate can be exposed to heavy taxing, which may even cause debt for your beneficiaries. To protect your assets as best as possible, it is imperative that you work with a tax professional for proper tax and estate planning.

Consulting a Los Angeles tax professional to review your estate plan or help you create a new plan for you and your estate is highly recommended. Doing so will ensure that your assets are protected, that probate is avoided and that tax problems are kept to a minimum. They can also help you prepare a living trust and will, so that there is no discrepancy about your intentions and you can have the peace of mind that your property will be taken care of.

Tax professionals can thoroughly evaluate your current tax status and structure and find problem spots; their expertise is tax and estate planning and their job is to make your personal and business estates as air-tight as possible, so that you can enjoy your assets while you’re living and your beneficiaries can continue to do so after you are gone.

If you are building a business, tax professionals also can help you structure it in the best way possible to provide protection for your assets, flexibility in tax planning, and financial stability from the early stages of your business, it’s growth and success and even its eventual sale.

Along with estate and gift tax planning, tax professionals use their expertise of entities and asset protection for your tax and estate planning to help you retain as much of your funds as possible for you and those you love.

When Is The Optimal Time To Sell Stock

If you were in the stock market in 2008, you probably felt like you were on a roller coaster at Disney World that was never going to stop.  Any stock investor has wrestled with the question, “when do I sell this stock?” at some stage of their investing career.  This two part article addresses that question, either if your stock is up or if it is down.

If your stock is up:

If a stock is up, the good thing is you are in the black and making money, congratulations!  You should always feel good about that.  However, we do not always feel good; especially if 2 days after we sold the stock it continued to rise another $3 dollars per share!

If you invest in stocks, the biggest thing to remember is you cannot time the market.  If you could buy at the lowest point and sell at the highest point during a predetermined time period, you would be a millionaire.  However, you can certainly watch the trends of a stock, and buy and sell within those trends.  The best thing to do when you buy a stock is have a realistic price in mind that you want to sell it.  If a stock hits that point, you have to be disciplined enough to sell it.  Setting that point depends on your goals:

1.  What is your investing strategy?  Are you a day trader or a frequent trader (every few days) who hopes to generate a positive cash flow?

2.  Are you a long term investor, who is hoping this stock will rise faster than the rest of the market over a longer period of time?

3. How long have you held this stock?  Let’s say you have held this stock about 11 months and have a 30% gain in it.  If you sell before one year you will have to pay short term capital gains.  If you pass 12 months of holding it, you fall into long term capital gains – usually saving 10% to 15% on the taxes.

At the end of the day, if your stock is up, you have made money.  Remember that fact and feel good about it.  Tomorrow you can always find another stock to buy, just make sure you know what you are buying (do research!) and have a strategy in place.

If your stock is down:

This can sometimes be a hard pill to swallow because technically you have not lost money until you actually sell the stock.  There is always a chance your stock can recover, but how long do you wait?

One of the important rules when buying a stock, is to set a price to sell it.  This includes a price if the stock goes up or down.  It is hard to sell your stock when it has declined, but sometimes it is necessary.  You must be disciplined to follow your strategy.  If you set a sell price that is 15% below your purchase price, and your stock hits that price you have to sell it!  There are several factors to consider when deciding to sell a stock:

1.  What is the strength of the company?  If this stock purchase was in a company with heavy debt and its long term prospects are not good then that should certainly factor into your decision.

2.  What time of year is it?  If you are in the later months of the year, you might consider selling stocks that are down to take the loss on your taxes.  If you have questions, you should consult your tax preparer.

3.  How much do you have invested in this stock?  If you have bought 1000 shares of a $1 dollar stock, it is probably okay to be more aggressive on your sell price because you do not have a lot invested.  If it falls to $.25 you have lost $750 but that is probably not going to break you.  However, if you invested $10,000 in this same stock, you may be sweating a little more.

4.  Do you need the cash?  If you can wait a little longer for a possible recovery, then do it.  Only you can make that decision.  However, be realistic about the possibility of recovery.  If you are still holding Yahoo from when it was $400/sh during the .COM boom days, it is probably time to sell it and take the loss on your taxes.

Remember, stock market investing is risky and not for those with a weak stomach.  However, if you are willing to do research and implement an investment strategy, you can do okay investing in stocks.  Good luck!