The Credit Report Free Press

Making HARP Play for You

Posted on January 27, 2012 by Blog Team

Even if you’re not underwater or in arrears on your mortgage, you probably would still love to lower your monthly payments. Who wouldn’t? Clearly, reducing one of your biggest monthly payments could make it easier to stay on budget.

The Home Affordable Refinance Program is designed to help those whose homes have lost value.

You may have heard that the Home Affordable Refinance Program (HARP) can help. If you qualify, refinancing your home through this federal program could help you lower your interest rate, which, in turn, could help trim your monthly mortgage payments.

So what is HARP and how do you know if you qualify?

What is it?

The Home Affordable Refinance Program is a refinancing program designed to help homeowners who are current on their mortgages, but who may have been turned down for traditional refinancing because their homes have lost value. The program may help them obtain new, more affordable, more stable mortgage(s), according to MakingHomeAffordable.gov, a website operated by the Departments of the Treasury and Housing & Urban Development.

Are you eligible?

MHA says you may be eligible for the program if:

Your mortgage is owned or guaranteed by Freddie Mac or Fannie Mae, and predates May 31, 2009.
You haven’t previously refinanced under HARP (there are some exceptions, so check out the website).
Your current loan-to-value ratio (how much you owe on the house versus how much it’s worth) is greater than 80 percent.
You’re current on your mortgage and have made no late payments in the past six months and no more than one in the past 12 months.
Your current mortgage servicer (the company that you make payments to) participates in HARP. Not all lenders do.

How do you apply?

First, you need to confirm that your mortgage is either owned or guaranteed by Fannie Mae or Freddie Mac. Then, you need to confirm that your mortgage servicer participates in the Home Affordable Refinance Program. Just as you would for traditional refinancing, you need to shop around to ensure you’re getting the best terms on your refinance.

The program won’t solve every homeowner’s mortgage woes, but if you qualify, this HARP can play beautiful music!

Posted in Debt | Tagged refinancing | Leave a comment

Beyond the Bank Account: Other Types of Savings Accounts

Posted on January 25, 2012 by Blog Team

When it’s time to spend your money, you know there’s more than one way to get the best deal. But are you as aware of the many options available to you for saving your money? The possibilities go way beyond a plain old bank savings account.

Consider other types of savings accounts to maximize what you put away each year.

In fact, there are many types of savings accounts, and using more than one can help you maximize the amount you’re able to save each year. You should always have a traditional savings account, even if it seems like you’re not earning much interest on it. That cash buffer acts as an emergency fund in case of financial disaster, like the loss of your job or a major home or car repair.

Other types of savings accounts can help you with other savings needs. For example, you need to save for retirement, and an IRA (individual retirement account) can help with that. Maybe you know you’ll need some extra cash in 10 years to put toward non-tuition, college-related expenses, and a CD (certificate of deposit) might work for you.

Here’s a quick primer on some of the most popular types of savings accounts:

1. Basic/passbook savings accounts – This is the traditional bank account that most people think of as a savings account. There’s usually no minimum deposit to open the account and you’re not required to maintain a minimum balance on it. The interest rate is typically very low, but you’re able to withdraw money from the account without penalty whenever you want it.

2. Money market savings accounts – You can earn more money in interest with a money market account through your bank. However, banks usually require you to keep a higher minimum balance in a money market, and may limit how much you can withdraw in a month. Some money market accounts also permit you to write a certain number of checks against the account each month.

3. Certificate of deposit (CD) – With a CD, you place your money in the account for a set length of time, during which it earns interest, usually at a much higher rate than you could get with either passbook or money market accounts. Each bank will offer different rates and terms for its CDs. If you withdraw money from the CD before the end of the term (known as the maturity date) you’ll pay a penalty.

4. Individual Retirement Account (IRA) – While the first three types of accounts we’ve reviewed can be used to save for any purpose, an IRA is specifically designed to help you save for retirement – hence the name! Leading up to retirement, you put money into a traditional IRA every year. The money you contribute to the account is free from federal taxes at the time you deposit it. You won’t pay taxes on that money until you withdraw it after you retire – at which time you will, hopefully, have a lower tax rate.

A Roth IRA is another option, and differs in that your contribution is made after paying taxes on the money, and is then tax-free when you begin withdrawing funds during retirement.

If there’s a downside to saving money – for any reason or in any type of savings account – we haven’t heard about it! Using a combination of these types of accounts can help ensure you meet your savings needs for the near future and your long-term financial goals.

Posted in Saving | Tagged CD, certificate of deposit, emergency fund, individual retirement account, IRA, money management, money market account, saving | Leave a comment

Ideas for Celebrating Your Financial Freedom

Posted on January 24, 2012 by Blog Team

National Freedom Day is around the corner. On Feb. 1, we commemorate Abraham Lincoln’s signing of the 13th Amendment, which abolished slavery and indentured servitude in the U.S.

Older couple sitting outisde at picnic table.

We've been thinking about ways to exercise your financial freedom.

But around here, the freedom we most commonly think about is the freedom that comes from proper financial habits. So we’ve been thinking about ways to celebrate your financial freedom.

Here are a few ideas:

Start a new savings account.

There’s no limit to how many savings accounts you’re allowed to have or to how much you can save. It’s entirely up to you. Even if you already have a respectable emergency fund and are doing right by your retirement savings, you can start another savings account.

Maybe you’ll use it to fund your summer vacation or next year’s holiday shopping. Or perhaps you’ll be able to use it to surprise your toddler with a car when he reaches driving age.

Do something for those less fortunate than you.

With the holiday season over, many charities struggle in the first few months of a new year. Whatever you can spare – whether it’s $10 or $1,000—would be appreciated and helpful. You’ll reap the emotional reward of knowing your money is doing good for others, plus your accountant will be happy to help you take the tax deduction.

Over the past several months we’ve been working with Ronald McDonald House, Working Wardrobes and Shadetree.

Use Your Smartphone.

Take advantage of mobile banking capabilities to check your accounts. One of the joys of our age of technology is the ability to keep on top of our money and what it’s doing at any time of the day or night, from the comfort of our own home office or in the backseat of a taxi.

Like the song says, “freedom isn’t free,” and that’s especially true when we’re talking about financial freedom. It takes hard work to earn and maintain your financial freedom, so on this National Freedom Day, you deserve to celebrate!

Posted in Budgeting | Tagged charity, financial resources, mobile, parenting, savings | Leave a comment

Timeless Financial Wisdom in Honor of Chinese New Year

Posted on January 17, 2012 by Blog Team

If you thought your New Year’s revelries were over for the next 12 months, think again! Chinese New Year is Jan. 23, and around the world billions of people will celebrate the arrival of the 4,710th year in the Chinese calendar.

Money and finances are not trivial pursuits, so some of the trivia surrounding money matters can be quite eye-opening and educational.

Chinese New Year is Jan. 23, and around the world billions of people will celebrate the arrival of the 4,710th year in the Chinese calendar.

Anything that’s been around for that long probably has some wisdom to impart, don’t you think? Here are a few timeless tidbits of Chinese wisdom – and our thoughts on how they can apply to your financial life as you celebrate Chinese New Year:

Count not what is lost, but what is left – This one may be particularly appropriate if your investments had a rough time in 2011! It may also ring true for you if you indulged in some overspending this past holiday season. Instead of dwelling on where you’ve gone wrong with your money management, focus on what you can do right in the future.
Fortune has a fickle heart and a short memory – Your financial life will always have highs and lows. If you leave things to chance, you’ll face more lows. Engage in smart financial planning, and you can maximize the highs.
Do not wait until you’re thirsty to dig a well – This one was practically coined to educate us on retirement investing. If you wait until you retire—or just before—to set aside money, you’ll be thirsty during your Golden Years.
Only time and effort brings proficiency – Money management is like anything else you want to do well: you have to work at it and practice to perfect your technique.
The saving man becomes the free man – This one is easy to interpret. By building up your savings in the form of an emergency fund, you can free yourself from financial worry when disaster hits.

And finally, this gem from Confucius, the famous Chinese philosopher:

Learning without thought is naught; thought without learning is dangerous. In financial terms, this one is a cautionary proverb. You’ll find no shortage of information to learn when it comes to money management. But in order to make that information work for you, you need to always be thinking about how to put your money to the best use.

Posted in Budgeting | Tagged budgeting | Leave a comment

Young Entrepreneur Challenge Turns Teaching Kids About Money into Fun Times

Posted on January 17, 2012 by Blog Team

Whether your little one wants to be a princess or an astronaut when she grows up, it’s a sure bet having a lot of money figures into her big plans. Teaching kids about money is important, and what better way to help them learn about the rewards of money management than by encouraging their entrepreneurial spirit?

Whether your little one wants to be a princess or an astronaut when she grows up, it’s a sure bet having a lot of money figures into her big plans.

Budding young entrepreneurs can learn about business-building from the best — no less than Warren Buffett, the Oracle of Omaha. Part of Buffett’s Secret Millionaires Club (at www.smckids.com) is the Grow Your Own Business Challenge.

Following the contest rules provided, kids submit their “business plans” for creating and growing a business.

Sponsored by CreditReport.com, the Secret Millionaires Club aims to teach kids important money management skills, including savings, investing basics and business.

The website is kid-friendly, teaching money lessons through cartoon characters that go on a series of adventures in online episodes you can view on the website. There are also games, a blog and even a Q&A section where kids can ask Buffet their specific money questions. Plus, the site has plenty of great information for parents.

Posted in Budgeting | Tagged parenting | Leave a comment

Automatic Bill Pay: A Step-by-step Walk-through

Posted on January 13, 2012 by Blog Team

Banking online has become mainstream. In fact, one 2010 survey, by Fiserv, Inc., a financial services tech company, found that 80 percent of all households with Internet access use online banking. Paying bills online is less pervasive, however, the survey found—just 40 percent of survey respondents pay bills online.

Auto pay is good for budgeting because it allows you to decide when the money will leave your account.

Although the survey doesn’t directly address it, it’s probably a logical assumption that the percentage of people who set up automatic bill pay is even less. Yet there are big advantages to managing your finances by paying bills automatically every month, including what the process can do to help protect your credit score.

Automatic bill pay is a great way to ensure you never forget a recurring expense that is the same every month, such as your cable bill, rent or mortgage. After the initial set-up, you don’t have to do anything ever again to ensure the bill gets paid every month. Since reliable payment history is an important element of your overall credit rating and score, anything that ensures payments are never late or missed is a good thing.

Auto pay is also a good budgeting tool because it allows you to decide when during the month money will go out of your account.

If you bank online, you probably already have access to automatic bill pay through your bank. Log on to your account and check it out. Most systems are pretty easy to understand and will give you clear direction on how to set up auto payments. Or, call your bank and ask for help walking through the process.

Many vendors, from cable and cell service providers to credit card companies, now also allow you to establish automatic payment through your online account with them. As with your bank, these systems are pretty easy to understand and set up. Keep in mind, however, that you’ll need to give the vendor your bank account information, so if that’s a concern, you might prefer to set up auto pay through your bank.

One important caveat: Using automatic bill pay does not give you a pass to skip looking at that bill—or your bank statement—every month. It’s not a perfect world, and mistakes or accidents can happen. You still need to check your bill every month to ensure no unexpected charge has appeared and that the expense is still the same. And you need to check your bank statement every month to ensure the money has really gone out of your account as planned.

Automatic bill pay can be one more smart tool you use to manage your finances and protect your credit score.

Posted in Budgeting | Tagged budgeting, how to, money management, personal finance | Leave a comment

Taking Control of Your Finances Part 1: Savings

Posted on January 12, 2012 by Blog Team

Few things in life are a one-step process. Getting a degree takes two, four or more years, depending on the degree you’re going for. Achieving your career goals can take years, too. Taking control of your finances is no different; it’s a multi-step process that can’t be achieved overnight.

There are two things everyone should save for – a rainy day and retirement.

With this blog post, we’re starting an occasional series on some of the ways you can start taking control of your finances.

Step 1 – Savings

The first question to ask yourself is: why are you saving? There are two things everyone should save for – a rainy day and retirement. Both will arrive one day, and probably sooner than you think!

Emergency Fund

Saving for a rainy day means creating an emergency fund of cash and building it to a certain level that would be able to sustain you and your family in case of a crisis, such as a job loss or major car or home repair. Most experts agree you should have enough in your fund to cover six to eight months of living expenses.

If money is tight, building an emergency fund may seem difficult, and it may take quite a bit of time, but it’s absolutely essential to do if you’re committed to taking control of your finances. It may help to start out small, saving just $25 or $50 out of every paycheck. You can also have your savings deposit automatically taken out of your paycheck; that way, you make sure to pay yourself first before dealing with other expenses.

Retirement

The other must-do savings task is putting money away for retirement, and it’s much more complicated than just creating a cash reserve for emergencies. You’ll want the money you set aside for retirement to grow between now and the day you’ll need it. That means making smart investing decisions.

Fortunately, you have lots of retirement investing options—like 401(k)s and Individual Retirement Accounts (IRAs). Many of them can also help lower your immediate tax burden. If you’re unsure where to start when it comes to creating a retirement plan, you can find plenty of free advice on federal government websites like IRS.gov, kiplinger.com or fool.com. Check with your employer to see if the company offers a 401(k), and be sure to participate if they do.

Finally, know when to get guidance. You can find many reputable financial advisors who can help you create a game plan for reaching your retirement savings goals. How to choose the right one for you will be the topic of a future post!

Posted in Budgeting | Tagged emergency fund, personal finance, retirement, savings, taxes | Leave a comment

What is a 401(k)?

Posted on January 11, 2012 by Blog Team

When you’re struggling to make ends meet every day, it’s hard to think about saving for the future. It can also be difficult to think about planning for retirement when you’re young and making good money. But money experts agree that the best time to start saving for retirement is when you’re young, and retirement is a long way off.

Experts agree that the best time to start saving for retirement is when you’re young

A 401(k) is a good way to save for retirement. So let’s start at the beginning – what is a 401(k)?

It’s a special account, offered through your employer, which allows you to take money directly out of your paycheck to save for retirement. As a reward for your pro-active savings, the federal government will allow you to defer paying taxes on the amount you put into the 401(k).

That means if your annual salary is $35,000 and you put $5,000 a year into your 401(k), your federal tax will be calculated on $30,000. You won’t pay taxes on any money you put into your 401(k) until you start taking it out of the account – hopefully when you’re retired.

You may think you can’t afford to put enough money into a 401(k) to make it worth your time. But crunch some numbers with an online 401(k) calculator, and you may feel differently. For example, according to Bloomberg.com’s online calculator, a 25-year-old making $50,000 a year, who invests just $1,000 every year until retirement, would end up with a 401(k) plan worth nearly $1 million.

There are some rules and regulations about how much you can put away in your 401(k) every year, and you can learn more about that at IRS.gov. You’re also restricted as to when you can take money out of the 401(k) without penalty. Take money out early, before you retire, and you’ll not only pay taxes on it, you’ll pay some penalties as well.

Some employers will contribute to your 401(k) as part of a benefits package. Usually, they’ll match your contribution up to a certain percentage. If your employer offers a 401(k) plan, participating in it is a great way to save toward retirement even if you can only contribute a little bit.

Posted in Saving | Tagged career, personal finance, retirement, savings | Leave a comment

Setting Smart Financial Goals: A Roadmap to Success

Posted on January 6, 2012 by Nicole K

Managing your finances is a lot like planning a road trip. You should start both endeavors with a destination in mind, make sure your vehicle is in good working order, carefully plan your route, and have a clear vision of what you’ll do when you arrive at your destination.

Managing your finances is a lot like planning a road trip.

Setting smart financial goals requires a good understanding of just what you want to achieve. Start by thinking about what kind of trip you need to take. Is your journey going to be a short jaunt, such as saving to buy a big-ticket item like a computer? Or is it a longer trip, such as saving for retirement?

Next, check over your “wheels.” In terms of financial planning, good credit, and smart saving and spending habits are the vehicle that will carry you to your destination. Keep yours in good repair by monitoring your credit regularly, taking steps to improve your credit score if needed, building your savings and managing your spending.

Once you know your vehicle is in good working order, you can start planning your route. Will you reach your destination by increasing your income? You may need a brief detour to pick up additional education. Is your financial destination a secure retirement? Finding just the right mix of savings and investments might be the best route for you.

While the journey toward your financial destination is important—and hopefully part of the fun—don’t forget that it’s also vital to have a game plan for what you’ll do once you’ve arrived. If setting smart financial goals is difficult, imagine how hard it is to hold onto success once you’ve achieved it. Just as a vacation can go downhill if you haven’t made plans for what you’ll do and see, your financial destination can go awry if you don’t have a plan for how you’ll handle success once you’ve reached your goal.

Hopefully, you’ll be able to find just the right roadmap to help you reach your financial destination—and enjoy the journey along the way.

Posted in Budgeting | Tagged financial goals, money tips, personal finance, retirement, savings | Leave a comment

Do You Know When to Do Your Taxes?

Posted on January 5, 2012 by Blog Team

When you think about doing your taxes, are you inclined to twist that old adage about not procrastinating? Do you ask yourself why put off ‘til tomorrow, the taxes you can postpone doing until the day after tomorrow?

Whether you think you’ll owe or are hoping for a refund, it makes sense to do your taxes early.

Avoiding your taxes will not make them go away, nor will it make the process any easier when you finally get around to doing them. If you’re wondering when to do your taxes, the answer is simple: as soon as possible.

For most of us, “possible” arrives around Jan. 31 each year, when employers must, by law, provide W-2s. Since most financial institutions also send out statements at the end of the year, by Feb. 1, you’ll probably have everything you need to complete your taxes.

Whether you think you’ll owe or are hoping for a refund, it makes sense to do your taxes early. If you do owe, you’ll have a couple extra months to figure out how you’ll pay your taxes. And if you’ll be due a refund, you can take the extra time to decide how to make the most of your windfall.

Keep in mind that filing your return before April 15 does not mean you have to pay your taxes before that date—although the IRS will happily take your money if you want to pay early. You can file and send a check later if you choose.

And if you’re owed a refund, filing sooner means getting that money back in your pocket that much sooner.

Of course, while you’re working on your 2011 tax return, you’ll want to get organized for next year’s taxes.

Posted in Budgeting | Tagged taxes | Leave a comment