Tackle Student Debt with CARES

by

If you have student loan debt, you need to be aware that the CARES Act has been extended.

The CARES Act was passed by Congress in early 2020. It offered temporary payment suspension and a 0% interest rate on student loans. It also offered a hold on all collections and wage garnishments on defaulted loans. President Joe Biden has extended it until September 30, 2021.

What the Student Loan Payment Relief Extension Does

Reminder: this isn’t the same as student loan forgiveness, because you still have to pay off your loans. The basic idea of this extension is that student loan interest rates will stay at 0% and payments on all federally owned student loans will be paused through the end of September. It’s a good idea to look at the Federal Student Aid website to double check that your loans are among those that qualify:

– Direct Subsidized Loans
– Direct Unsubsidized Loans
– Direct PLUS Loans
– Direct Consolidation Loans
– Federal Perkins Loans (if they’re not owned by the college you went to)
– Federal Family Education (FFEL) Program Loans (if they’re not commercially owned)

How the Extension Affects Different Loan Situations

Default: If your loans were already in default, this extension will give you the chance to get caught up. You can do your best to make those late payments without having to make any new ones!

Public Service Loan Forgiveness: If you’re in the process of qualifying for this type of loan forgiveness, any payments you make during this time count toward your 120 payments needed.

Private Student Loans: If you have private student loans, this extension doesn’t apply to you since your loans didn’t come from the federal government. It’s still worth chatting with your lender about an extension or some other plan if your finances have taken a hit.

What You Can Do to Pay Off Your Loans

If your income is stable 
Keep crushing your monthly student loan payments. Pay more than the minimum payment if you can.

If you have an at-risk income 
Save up a $1,000 emergency fund and keep making the minimum payments on all your debts. If you’re in a really tight spot, pause your student loan payments during the extension period and save any extra money you have until you’re able to get a more solid income.

If you’ve lost income 
Try to stay calm. Make it your top priority to cover the Four Walls (food, utilities, shelter and transportation). Pick up whatever side jobs are available, sell what you can, and try not to lean on credit.

If you have more than one student loan 
Think about consolidating and refinancing—but only if you can refinance under a zero cost, fixed (and lower) interest rate loan with a repayment period that is the same as or shorter than the original. 

If you have questions or would like more information, see how we can help today!

Did you work at home in 2020? Read this.

by

There’s no denying 2020 was a year for the record books. Many of us sheltered in place and found ourselves unexpectedly working from home, and we’re just now learning some of the tax implications of that necessity.

Below you’ll find a letter our team of tax pros is currently providing our Ohio tax clients. If you have questions about this, please contact our office directly. And as always, if you need additional tax support, we’re here to help!

Greetings:

If you are an employee whose regular work location is in a taxing city, you typically have city tax withheld from your paycheck. In a normal year, you are allowed to file for a refund for taxes paid on wages earned on days that you worked from home or other locations outside of city limits.

However, Ohio House Bill 197 was passed in early March 2020 stating that during the period of emergency declared by Executive Order 2020-01D, any day on which an employee works from home or another location because of the emergency declaration shall be deemed to be a day working from the employee’s principal place of business. Therefore, Ohio municipalities are taking the position that no refunds should be issued for the days worked from home or other location due to the pandemic. 

It is questionable whether it is legal for the municipalities to tax wages that were not earned within their jurisdiction, and a lawsuit has been filed by The Buckeye Institute against the City of Columbus and the State of Ohio.

If the lawsuit is decided in favor of The Buckeye Institute, you potentially could be due a refund of the municipal taxes that were withheld.

We are following this litigation and plan to alert our clients that could be effected by this decision in the event that it becomes appropriate to file for a refund.

If we are preparing your 2020 tax returns and you would like to be notified if the municipal refund policy is reversed, please contact our office.  

3 Tips for Raising Financially Savvy Kids

by

Would you like to form a valuable financial legacy for your kids that goes deeper than an inheritance? 

No matter what the future holds, we want our children to be well prepared. That type of preparation begins with parents and guardians who are willing to teach them how to have a healthy relationship with money. 

As you teach your children about earning, saving, spending, and sharing their money, here are three helpful tips: 

1. Start young. 
Encourage smart money habits with your kids as early as possible. Instead of an allowance, encourage kids to do age-appropriate jobs around the house to earn a little money. There are many lists online that will break down tasks by age. These responsibilities offer even the youngest child the ability to take pride in a job well done. Once children have earned a little of their own money, you’ll be able to teach them the basics of saving, spending, and generous giving—lessons that will last through adulthood.

2. Let them make mistakes. 
It can be hard to watch your child suffer because of their own poor choices. However, it’s best to love them enough to let them make mistakes and learn about consequences while they’re still under your protection. Don’t run in and fix things. Resist the urge to offer them a handout that wasn’t earned in order to rescue them from a decision they made.

3. Look for teachable moments. 
Let’s imagine that your child spent all of his savings on a toy, but now wants to buy candy as you check out from the store. He then begs you to buy him the candy or give him money to cover the cost. Sure, it would be easy to give in—but he won’t learn a thing. Gently explain why things didn’t work out the way he wanted. Then, talk through what he might have done differently this time and show him how he can make the situation better next time.

We’re here for you and your family at every age and stage. If you’re interested in leaving a financial legacy that lasts throughout the generations, ask how we can help! 

5 Ways to Reset Your Money Goals

by

It’s nearly the end of January, which means it’s time for a check-in.

How are you doing with your goals for 2021?
Are you taking healthy steps?
Are the actions you’re taking today paving the way to a better tomorrow?

We want to see you succeed this year, so we have put together five simple ways you can reset your goals: 

  1. Start with the end in mind. 

What do you want to accomplish this year, next year, five years from now? How will changing your habits today make that possible? Do you want to pay off your mortgage? Buy a new car with cash? Save for retirement? If you have a focused list of goals, it will be easier to plan and take the steps you’ll need to in order to reach them.

2. Evaluate your spending habits.

Get your bank statements out and take a long, hard look at where you’re spending money. For example, if you get a $4 cup of coffee every single morning (365 mornings), you’re spending $1,460 a year. If it costs $1 to make coffee at home, you could save that $1,095 for something else. Perhaps that $4 coffee is really important to you, but is it more important than your long-term goals?

3. Make a zero-based budget.

This may sound daunting, but it is actually very simple to make this type of budget. At the beginning of the month, you plan your spending so that your total income minus your total expenses equals zero. You give every dollar a job in your budget. This will help you set priorities for your money.

4. Beef up your emergency fund.

Building a $1,000 emergency fund will act as a buffer between you and life. If you’re completely out of debt, set a goal to build that emergency fund up to have enough money in savings to cover 3 to 6 months of expenses. That way, if an emergency comes along, you can pay cash instead of turning to debt.

5. Track your progress

Building wealth takes time. It’s a long-term game. Because of that, it is vitally important to track your progress along the way so that you can visualize and celebrate the small wins. Celebrating the small wins help you stay fired up for the long haul.

We want to see you find success this year. Ask us how we can help you achieve your goals! 

Avoiding Holiday Hangover

by

The season of Christmas brings with it a special joy that is welcomed by many after a long and difficult year. The twinkle of lights, the familiar melodies on the radio, and the aromas of the season bring with them comfort and expectation. 

Yet, it’s very important that you have a plan to be intentional with your holiday spending so that you don’t end up with financial stress rather than yuletide joy. 

We can help you find ways to be wise with your spending and still enjoy this season of giving. Follow this simple list and you will be well on your way to avoiding a financial “holiday hangover”:

  1. Make a budget. Write out a budget for what you can afford to spend, not what you want to spend. Be realistic with your financial capabilities. Make a detailed list of who you’re buying for this Christmas. Put a specific dollar amount by their name. Also, don’t forget that if you choose to celebrate the holidays with a trip or special party for your family, events like these generally require extra expense and should be part of your holiday budget. 
  2. Have a list of wants vs. needs. It’s easy to spend money on the wrong priorities, especially around Christmas. Keep your items in two categories: wants and needs. Take care of your needs first, then see what money is left over in the budget. You may have to tell a “want” that it needs to wait.
  3. Don’t sign up for a guilt trip. Christmas might look different this year, and that’s okay. If you lost your job, don’t feel guilty because you can’t spoil the little ones. Often creative memories matter more than gifts. Read an exciting library book together, make up a story together, share a time of singing and dancing. Children will find joy in the smallest traditions. Don’t allow guilt to steal your ability to find joy as well. On the flip side, let your friends and family off the hook if they can’t afford to exchange gifts or travel to see you. Let’s choose to support each other and offer grace. 
  4. Watch out for emotional spending. The holidays bring up all sorts of feelings. It’s the easiest time of year to justify overspending, because we’re in a celebratory mood. But there’s also a lot of stress. Don’t go shopping if you’re feeling lonely, feeling sorry for yourself, or you’re just plain bored. Also, if you think you want to drop a lot of cash on a big purchase, wait at least 24 hours before you make your decision to avoid impulse buying.
  5. Be on guard when you’re online. Marketers are smart. But remember, seeing the same ad over and over for that fancy watch you’ve had your eye on doesn’t mean it’s meant to be. Don’t let their target marketing knock you off your target goal of making your financial dreams a reality.

These hints will give you a chance to regain some lost ground, and do things differently. By being intentional with holiday spending, you’ll avoid waking up to an empty bank account in January. 

If you have any questions about these hints or would like to make progress on your wealth-building goals, see how we can help today!

What is a Debt Snowball?

by

The leaves have fallen, there’s a chill in the air, and winter is well on its way to many parts of the U.S. Although we aren’t in a winter wonderland quite yet, we can still discuss one of the most important strategies for getting out of debt: the debt snowball.

The phrase “debt snowball” is a metaphor to describe a very successful way to pay off debt and walk toward financial freedom. Imagine you are standing on the top of a mountain that is covered in snow. You reach down to make a snowball and set it on the ground to roll it down the side of the mountain. As it rolls, it collects more and more snow. When it reaches the bottom of the mountain, it has collected so much snow that it looks more like a giant boulder. This is the idea behind the debt snowball.

To put this plan into action, you must first decide to stop creating debt. Make a zero-based budget you feel works for you. Decide right now that you will not use a credit card or take out any more loans. Then, once you have stopped creating more debt, and you have saved $1,000 for an emergency fund, you can move forward with this plan for eliminating your debts.

To “make the snowball” at the top of your “debt mountain,” you just look over every debt payment you have (except your mortgage) and put those debts in order from “least amount owed” to “greatest amount owed.” 

Next, you make a plan to pay off that debt as quickly as possible. You can get creative here: have a yard sale, take a month off from eating take-out, have a one-month spending fast. Completely pay off that first debt. Once it is paid off, turn to the next debt on the list. Everything you were paying toward the first debt now gets added to the second debt. Instead of the monthly minimum payment on that second debt, you make that payment plus the amount you had been paying on the first debt. 

When that debt is also paid off, you move the payments from the first two debts over to the third debt and so on until you have paid off your final debt. Over the course of this process, the amount that you budget monthly toward your overall debt will not change. Yet, each time you pay off a debt, the amount available in the budget for the next debt grows—like a snowball rolling down a hill. Eventually, you will be completely out of debt!

Have questions about paying off your debt? See how we can help today! 

A Brand New Car!

by

Vehicle companies have been rolling out the 2021 models for cars, SUVs, mini vans, and trucks for a few months now. If you’re in the market for a new vehicle, perhaps these new models have caught your eye. Before you make your purchase, take a few moments to consider why it may not be in your best interest to drive off the lot with the newest model. 

Many car companies will attempt to lure you in with a promise of 0% interest on a new vehicle. However, the only way you have a chance of getting 0% interest is if you have perfect credit and pay full MSRP (manufacturer’s suggested retail price). There are two reasons that, even if you have perfect credit, you don’t want to take the dealership up on their offer. 

  • If you are paying the full MSRP, you are already paying more than you need to for a car. If you walk into a car dealership with cash and haggle with the salesperson a bit, they will generally knock a bunch off the sticker price. Saving your money and waiting until you can pay cash for a new vehicle will allow you to get that vehicle for less money and still have no interest hanging over your head!
  • If you are paying the full MSRP, you are already paying more than you need to for a car. If you walk into a car dealership with cash and haggle with the salesperson a bit, they will generally knock a bunch off the sticker price. Saving your money and waiting until you can pay cash for a new vehicle will allow you to get that vehicle for less money and still have no interest hanging over your head!

The 0% interest offer is a gimmick that tricks a lot of unsuspecting folks into buying something they don’t need and can’t afford. 

Have questions about how to plan and save for your next vehicle? See how we can help today!

To Rent or Not to Rent?

by

Are you planning a move this year or next? If you are, we’re here to help. One of the most common questions we get from people making this transition is: “Should I rent or should I buy?”

Here are two questions that will help you set priorities and make an informed decision as you investigate your options.

How long will you be in the area?

If you don’t plan to be in the area for longer than three years, it’s often more desirable to rent than to buy. When you rent, it is easy to be flexible and step away from your lease in order to travel or make another move. Attempting to sell a home is often a much more difficult process. If you decide to rent, try to find a place that is financially wise. Spending extra for things like a racquetball court, skylight or hot tub—even when you know you will only be renting temporarily—may not be financially prudent. Keep an eye toward the future and use your time as a renter to pay off debt and save for the future rather than spending that money on fancy amenities. 

Are you working your way out of a lot of debt?

Are you still in the early stages of paying down some major debt? Are you renting in order to have fixed and predictable expenses so you can tackle that debt and begin saving? Good plan. Renting can be a helpful (temporary) stop along the road, but it is not a destination. Although renting can save you money on things like repairs, homeowners insurance, and property taxes, you will have nothing in your possession for all of those payments at the end of your lease. If you decide to rent in order to reduce debt—make a plan, stick to it, and enjoy watching your debt fall away and your savings grow.

If you plan to remain in the area for longer than three years and your finances are in order, it makes the most sense to purchase a home. Although there may be more unexpected expenses, you can work on your emergency fund and set aside money to cover those expenses in your monthly budget. Then, you will be spending money on something tangible that you will eventually own.  

We hope this has helped you with your decision, but remember—we are here for you! Talk with us about whether renting or buying is the right choice for your next move. See how we can help today!

A Happy 2021 Starts Today

by

When you wake up on January 1, will you be excited to say goodbye to 2020? Are you looking forward to the promises that next year holds?

If you are among those who are eagerly anticipating the New Year, it’s important to know that there are some simple steps you can take during this final quarter of 2020 that can have a huge impact on your finances for next year. 

Rather than waiting for the calendar to change and hoping that changes your situation, here are some steps you can easily take to build a foundation for a better future.

  1. Live on a monthly budget. It’s easy to make excuses for not keeping a budget. However, a budget is one of the most important foundational steps to financial success. It doesn’t have to be complicated either.

    Give each dollar a job as it enters your bank account so that it only leaves your bank account when you need it to do exactly (and only) that job. Become the boss over your income. Having a plan allows you to see what the dollars in the bank need to do and will help you have a clear picture of your true priorities. There are many apps out there that make budgeting accessible and simple such as EveryDollar , Mint, or YNAB. 
  1. Stay out of debt.  As you track the money you are depositing and give that money work to do, make it a priority to use only your own money to pay for your lifestyle. If there are things you desire that would require you to use debt, consider reordering your current life situation to fit your income.

    The debt of today steals from the joy of tomorrow. Your income, whatever the amount, is able to build a foundation of wealth for you if it isn’t going into the pockets of creditors. Be wise about your priorities and stay away from the pull of clever marketing tactics. Be patient and stick to your plan.
  1. Save. Once your budget has allowed you to see what your priorities are and has helped you escape from building debt, allow that budget to help you build wealth by saving as much money as possible.

    If your money isn’t paying interest to creditors, you will be able to set aside money to cover emergencies as they arise rather than using credit cards. If you begin saving now, you will be in a place to more easily take all the unexpected things (both good and bad) that life will throw at you.

No matter what step you are on in this process, we are here to help you develop a plan you can actually follow through 2021 and beyond. 

Have questions about budgets, debt, and saving? Schedule a session today!

Savings or Debt? Be Smart with Cash on Hand

by

The last few months have been a strain on most families. Even if you’ve been fortunate enough to maintain employment in these uncertain times, questions are rising up from families from all walks of life. Among them, “Should I use up my savings to pay off my debt?”

There’s no one right answer to this question. But here are a few tips to help you decide what’s best for you and your family. 

Dealing with your debt.

If you have credit card debt, it’s important to know the debt isn’t your real problem. It’s a symptom of the problem—which is poor spending habits. If you’re well on your path to becoming debt free, it’s wise to focus efforts on continuing if you can. 

But if you’re not? Pause, take a hard look in the mirror and go set up a zero-based budget you can actually stick to before you liquidate your savings to pay off debt. Making major financial decisions in times of panic without support can lead to ruin. 

How much savings do I really need? 

If you’re paying down debt, an emergency fund of just $1,000 is what you really need. The sooner you get out of debt, the sooner you can build it up again using cash. 

That being said, we are living in what some might call “a state of emergency” on all fronts. If you are dealing with a loss of income or worrying your job could be the next one eliminated? Don’t feel like you have to pare down to $1,000 and put yourself at risk. Wait for things to stabilize and then get that debt snowball rolling.   

Bottom line: Don’t panic. 

If you have a robust emergency fund, don’t be afraid to use it. Avoid cashing out your retirement if you can, but do what you need to do. Bottom line—don’t let an emergency send you deeper into debt. Stay smart, proactive and level-headed as you ride out the storm.

And when you aren’t sure WHAT to do? Ask us. 

We’re here for you—always ready to help you navigate uncharted waters and continue building a financial future you really want. No question is stupid except the ones that aren’t asked. Schedule a session today!