Uncategorized | John J. Bowman Jr

Category: Uncategorized

July 15, 2020

3 Key Money Moves to Make Before You Retire

Proper planning is necessary for a successful retirement, as many essential moves are made years before a retiree leaves the working world. Here are three of the most crucial money moves you should be making in preparation for your retirement to live out the rest of your life comfortably.

Eliminate as Many Debts as Possible

Once you retire, you’ll likely be living on a primarily fixed income provided by a blend of pension payments, social security, and investments. Interest on debt payments can rapidly eat into this income, so you must pay off as much debt as possible before you retire. This means paying off all of your credit card balances, car payments, and mortgage, if possible. By getting rid of interest payments, you’ll make the most of your retirement income each month.

Adjust Your Portfolio’s Risk Level

For young investors, riskier investment strategies are often beneficial in producing long-term growth. As you approach retirement, though, you’ll need to re-balance your portfolio to reduce your risks and ensure that you won’t be wiped out by changes in the market. Often, this is accomplished by increasing the ratio of bonds to stocks held in investment accounts. A common rule of thumb is that your portfolio should be split evenly between stocks and bonds when you expect to live another 15 years.

Use Your Last Few Working Years to Bulk Up Your Savings

The final 5-10 years of your working life are some of the most important for successful retirement planning. These years should be spent saving as much income as possible while reducing expenses in preparation for retirement. If you remain healthy and avoid major financial pitfalls, you should be able to substantially take advantage of your late-career years to increase your retirement savings.

By taking these three necessary steps, you can set yourself up for the best possible retirement. While retiring takes years of planning and preparation, these essential money moves will help you navigate the process more efficiently and give you financial peace of mind after you leave the workforce.

June 19, 2019

Top Personal Finance Apps of 2019

Many people struggle with managing their money. Tracking bank balances and expenses can be tedious and somewhat dull. The good news is the technology industry has made it much easier to balance checkbooks and pay bills using the power of smartphones and apps. There are hundreds of personal finance apps to choose from, so here are some of the best personal finance apps of 2019 to help narrow down the list.

Prism for Bill Payment

Prism combines all your bills and bank balances in one user-friendly platform. You can schedule bills for payment and receive due date notifications. There is no charge to download the app, and it is compatible with Windows 8, Kindle, iOS, Windows Phone, and Android phones.

EveryDollar for Budgeting

Dave Ramsey, the well-known personal finance guru, helped design this app’s budgeting features. The app features a built-in expense tracker that connects to your financial institution. Using this feature, you can see how much you have spent each month and how much money you have left to spend. The app also has financial planning that lets you contact money management experts.

Clarity Money for Managing Subscriptions

This app lets you manage all of your monthly subscriptions in one platform. Unfortunately, many people cannot keep track of all their subscriptions and do not realize just how much money they are spending. Clarity Money eliminates the need to handle monthly subscriptions individually.

The app also allows you to analyze your spending patterns and how you can improve your finances based on those patterns. You also receive a free Vantage credit score from Experian.

Acorns

This app invests money for you every time you make a purchase with a credit or debit card. For example, if you spend $3.75 using a linked card, Acorns will round up that transaction and invest the $0.25 in a portfolio of exchange-traded funds. The app makes it possible for the average person to invest without spending thousands of dollars with large investment banks.

Personal finance apps are not the only digital option you have to manage your finances. Many reputable online financial publications offer free budgeting worksheets, templates, easy-to-use financial calculators and offer tips on how to build a budget that works based on your unique financial situation.

March 29, 2019

What Your FICO Score Means

Just as the understanding of the value of a dollar comes with time, the importance of your credit score often evades us until we are deciding to buy a car or purchase a home. The gravity that a credit score holds is substantial. These scores influence the credit available to you and the terms that go along with it, such as interest rates. When looking to purchase a car or home, lenders rely on the consumer’s credit scores for an understanding of the risk they take on by loaning money.

While there are different credit scores, the most widely used and accepted is the FICO score created by Fair Isaac Corporation. Using the information provided by one of three major credit reporting agencies (Equifax, Experian, and Transunion) FICO creates a credit score ranging from 300 to 850, with the higher number representing lower risks for lenders and insurers.

How exactly do they determine a consumers credit score? FICO analyzes five main factors, which each have a different impact on the score:

Payment History (35% of the FICO score)
Debt/amounts owed (30%)
Age of credit history (15%)
New credit/inquiries (10%)
A mix of accounts/types of credit (10%)

While the exact number of your credit score can be distracting, it is more beneficial to focus on the areas that require work, rather than feeling overwhelmed by your rank on the credit range. Let’s take a more in-depth look at the five main factors considered by FICO when determining consumer credit scores:

Payment History

This is simply how well does a consumer do with paying their bills on time. Credit reports show when consumer payments are submitted for lines of credit, and it specifies how long payments took to come in: 30, 60, 90, 120 or more days late. Since payment history is the most significant component of a credit score, it is essential to get all credit line payments in as soon as possible.

Accounts Owed

This refers to the amount of money a consumer owes in whole. Having a lot of debt doesn’t necessarily have a significant impact on your credit. Instead, FICO looks at the ratio of money owed to the amount of credit available. Put simply, do not max out your lines of credit.

Length of Credit History

The longer a consumer has had credit, the better this element of their score will be. FICO looks at how long the oldest account has been open, the age of the newest account and the overall average.

New Credit

This refers to recently opened lines of credit. If a consumer opens a bunch of new accounts in a short period, this signals FICO that there is a higher risk, which lowers the consumer’s credit score.

Mix of Accounts
Just like stockbrokers want to diversify their portfolios, consumers want to expand their credit portfolio. With a healthy mix of retail accounts, credit cards, installment loans, such as a car loan, and mortgages, a consumer has ensured a higher FICO score.

March 1, 2019

4 Ways to Wisely Use Your Tax Refund

Now that tax season is fully underway, you may be thinking about what you want to do with your tax return when it comes in. For some, it might go right into a savings account. For others, it might be an opportunity to splurge on different items you’ve had your eye on. A healthy balance between the two, is looking into some wiser ways you can utilize your refund. If you’re waiting on your refund to come in, consider some of these great options to put it towards:

Contribute to Your Emergency Fund

You may have one already, and if you don’t, it might be a good time to consider starting one. An emergency fund is a great tool to have in case you encounter an unfortunate major expense that you wouldn’t regularly have the funding for. You can contribute to your emergency fund on a regular basis depending on your pay schedule. However, when your tax refund comes in, depending on the amount, you may be able to make a large contribution, and give yourself a better financial cushion in the event of an unexpected expense.

Invest in a Down Payment

You may be in the process of looking for a new home, or even a car. Both of these purchases are likely to require some sort of down payment, especially if you want your monthly payments reduced as much as possible. Your tax return is a great way to contribute to a downpayment and significantly lower what your monthly costs or the length of your finance or mortgage term will be. If you’re buying a home, for example, this lump sum of money will be a great contribution to your down payment or even your closing costs.

Pay Down High-Interest Debt or a Mortgage Payment

Any debt you’ve been carrying for a while is likely racking up interest, and depending on the company or what type of loan it is, the interest rate could be extremely high. Your tax return would be a great way to pay down some high-interest debt and bring you closer to having it paid off completely. Additionally, you can also consider contributing to your mortgage payment if you’re a homeowner. However, you should always make sure that your mortgage company isn’t going to charge you a penalty for early or pre-payment. If you’re certain you won’t get a penalty charge, consider using your tax return to make some additional mortgage payments.

Make a Home Investment

If you’ve been wanting to make some interior or exterior home updates, refund time is a great time to do it. This extra money may help you make improvements or updates that you might not have been financially ready for before. In the long run, this will ultimately improve the value of your home while turning it into exactly what you envisioned.

January 4, 2019

Great Ways to Boost Your Credit

One of the many ways we are “defined” by society, is by our credit score and history. Your credit information has a very significant impact on not only your personal finances but also a majority of your life and different events you may experiences, such as buying your first home. The first step in credit management is establishing your credit score. Once this is done, it’s important to remember that you’ll want to continue to build your credit up in various ways; you can do this by gradually making small credit charges or larger transactions such as financing or leasing your first vehicle. Always remember that any credit charges you make need to be paid back within a specific period of time, and late payments can negatively impact your score, as well as result in late charges and higher interest payments. Here are some great tips for boosting your credit:

Make Payments On-Time

Whenever you make a credit charge, you should keep the payment due date noted somewhere where it will help you remember. Credit cards are a great tool for boosting your credit when they are used properly; however, they can do more harm than good when they aren’t managed correctly. Any credit card charges you make should always be paid on early or on time. This will give you a good rapport with the credit company, as well as boost your score. You’ll also avoid any late charges, and you’ll have a better chance of getting future credit cards and other purchases with low-interest rates.

Avoid Making Minimum Payments

While minimum payments are an option that you’ll usually see when you’re making a payment, it’s best to pay your bills in full if you can. Minimum payments tend to extend your payback period, as you’ll incur interest that can sometimes make a minimum payment useless. Do your best to make any payments in full. If you’re unable to make them in full, try to pay back well over the minimum, to tackle the balance the best you can.

Address Any Late Bills or Payments

Late bills or payments can happen sometimes. As humans, we forget, and it isn’t uncommon. You may have changed bank accounts or hit a financial hardship that caused you to get set back on some payments. If that’s the case, once you’re in a better financial position, work on getting any late payments or bills settled as quickly as possible. This will help bring your credit score back up if it’s taken a hit recently.

December 8, 2018

Steps to Setting Up a 529 College Savings Plan

As a parent, your number one concern is always your children and how you can best provide for them. While they may be young still, the future of their education is likely only a few years away, and as time goes on, college tuition costs are increasing drastically. This may concern you, especially if you’re still paying off your own loans from your college days! Luckily, there’s hope, and a great way to get your little one’s future college finances in order. The solution: a 529 college savings plan. Wondering the best way to set one up? Here are some simple tips:

Pick a Plan that Works Best for You

When it comes to 529 plans, it’s not as simple as just one. There are two main types of 529 saving plans that you can choose from. You can decide if a prepaid plan works best for you, or if an investment plan is a better choice. If you decide on a prepaid plan, you can think of it as a locked-in plan. You generally pay for a year or a portion of the tuition ahead of time, locking in the price. Depending on your state, the requirement can vary. Investment plans give you the ability to choose how you want to invest your funds, and how you can use the money depending on the institution that’s chosen down the road.

Open the Account

To open your 529 account, you’ll need to submit an application; this can generally be completed online; however, in some cases, you may need to mail it in. Additionally, you’ll need to choose the right account to work with, whether it’s an Individual (Custodial), Trust, or Business account. From there, you’ll choose the custodian (likely yourself), and the beneficiary, (your child).

Choose the Right Investments

Your investment portfolio is the next step in your process, and it usually depends on your investment preferences. In most cases, you can choose an age-based portfolio that lines up with the age of your child (beneficiary). This way is usually the easiest way to manage your investments. You can also go with an individual portfolio that will give you the ability to build your investments on your own, any way you’d like. Either way, you’re able to switch your options and change them if you want to down the road.

Submit Application & Deposit Funds

When your application is completed, either a physical copy to mail in, or done electronically online, you can submit everything with either a check or electronic funds sent to the account. It’s always important to make sure the submitted information is accurate, or it could prolong the process.

November 8, 2018

Essential Saving Tips for First Time Home Buyers

Buying a home is a process that can often take a substantial amount of time, and cost a lot of money. As a new homeowner, it’s wise to expect a number of expenses, in addition to your mortgage and taxes. From closing costs to renovations and new furniture, buying your first home can prove to be quite costly. If you want to make sure you budget properly, and remain in control of your finances throughout the home buying process, here are a few solid tips to follow.

Home Repairs

Unless you’re buying a brand new home, you will likely be faced with a few repairs; if you’re in a fixer-upper situation, your repairs could run you thousands. Older homes face tremendous wear and tear, and you’ll need to spend on different materials and tools to make fixes are or completely replace something. Having a separate budget after closing costs is a great way to ensure that you’ll have the right amount of funds to cover any necessary repairs or renovations. As time goes on, you can use your budget to focus on other things you may want to change in your new home.

Maintenance

Property upkeep is another financial factor to consider when purchasing your first home. You’ll need to set aside money throughout the year to save for general maintenance. Exterior projects such as lawn and landscaping, or interior projects like painting or purchasing new appliances, to mention a few.

HOA Fees

Depending on where you decide to buy your home, you may need to factor Home Owners Association fees, into your budget. HOA fees can potentially add a few hundred dollars to your monthly expenses, in addition to your mortgage and other utility bills. Additionally, it is wise to consider other expenses, like homeowners insurance; which is sometimes required as a first time home buyer or buyers that are using an FHA loan. Never forget to factor in your property tax; depending on your location your property tax cost could vary.

Emergency Fund

Creating an emergency fund is essential when owning a home. It isn’t uncommon for an unexpected expense to come up that may require immediate payment. Plan ahead for things like this, and assure that you can handle a financial emergency. Contribute a percentage of your pack check every month into a separate fund that you don’t use unless you absolutely need to.

August 22, 2016

5 Best Apps for Budgeting

Have you been thinking about trying out a new budget? There’s an app for that. The list below highlights some of the best money management apps on the market. What are you waiting for? Get downloading!

Mint.com

Mint.com is a great free app to track a multitude of financial area. You can track earnings, savings, spending, budgeting, and even retirement accounts. There is a bit of initial set up because you need to sync all your accounts to the app, but after that it’s smooth sailing. Mint.com is great in the regard that it supplies you with a financial overview, but also tracks cash flow in real time. You can see your money coming and going so you can adjust accordingly.

GoodBudget

Goodbudget is another excellent free app that want to budget based on cash caps. You can separate spending into “envelops” and track how much you’ve spent against what you previously allocated for yourself. GoodBudget even takes into account those people who receive an irregular source of income. Freelancer and service industry folks – rejoice!

PocketGuard

PocketGuard is a free app that is available on both iPhone and Android markets. There is even an Apple Watch component available! PocketGuard is a simple app that connects to your bank accounts so you have access to your current transactions. The app lets you know how much money you have in your “pocket” now, what your cash flow looks like, and even analyzes spending so you know what to plan for.

HomeBudget

HomeBudget is a paid app that allows you to sync a budget up between devices. Each device needs to purchase the app, but it allows a hands on approach across multiple devices. The comprehensive platform give multiple people access to the family or home budget so you can all be on the same page. Pretty nifty, huh?

Wally

Wally’s a free app that at it’s core is an expense tracker. It allows you to manually enter expenses or take a picture of your receipt. The app will adapt to your spending habits and goals to help you achieve whatever you set out. If you want to pay down debt or save more money, Wally has your back.