Year End Financial Checklist

Year End Financial ChecklistCan you believe we are near the end of the year already?

Time flies and I am sure that if you are like me,  you are looking forward to the holiday celebrations and some well deserved rest.

However, before the year runs out, I wanted to give you a year end financial checklist.

The great Zig Ziglar said: “It’s true. Spectacular preparation precedes spectacular performance.

These actions will help you prepare to  start the new year on the right foot with your finances:

1. Check your Credit Report

Have you checked your credit report lately? This is something you should do at least once a year.

According to the Federal Trade Commission (FTC):

A credit report includes information on where you live, how you pay your bills, and whether you’ve been sued, arrested, or filed for bankruptcy.

Nationwide consumer reporting companies sell the information in your report to creditors, insurers, employers, and other businesses that use it to evaluate your applications for credit, insurance, employment, or renting a home.

The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months.

So take the time to request a copy of your credit report.

  • You can order your free annual credit report online at annualcreditreport.com, by calling 1-877-322-8228, or by completing the Annual Credit Report Request Form and mailing it to:
    • Annual Credit Report Request Service
    • P.O. Box 105281
    • Atlanta, GA 30348-5281
  • Get a report from each one of the agencies.
    • They are supposed to cover the same information but there can be differences.
    • In some cases entries in one report will not show up on the other reports.
  • In case you cannot get a copy of your report from the online website, proceed with the phone call or complete the form to request via  mail.
    • Just make sure you get your hands on that report.
    • If I had done this, I would have taken the steps to correct the problem before starting the mortgage refinance.
  • Review your report for any inaccurate entries.
    • Keep in mind that only entries that are inaccurate can be removed from the report.
    • Don’t fall for scams that promise to “clean-up your credit”.
  • If you find any inaccurate entries, contact the appropriate credit reporting agency.
    • Send a letter via certified mail, return receipt requested detailing the inaccuracies.
    • Consumer reporting agencies must correct or delete inaccurate, incomplete, or unverifiable information.
    • Inaccurate, incomplete or unverifiable information must be removed or corrected, usually within 30 days.
    • Additional information can be found at the FTC website.

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2. Assess Your Insurance Needs

As you work on your financial plan, I also want you to consider the need to manage the risks to your finances by evaluating the role of insurance in your financial plan.

What is the role of insurance? In simple terms, insurance is the tool that is designed to protect you and your family against what might happen.

Ensure you have the right type of insurance and the right coverage to protect your financial plan.

3. Check Your Retirement Plan

Understand how your plan is progressing and make adjustments as needed.

Even with all the focus on personal finances today, planning for retirement is one area where we continue to come up short.

The good news is that you can do better than average. Seven years ago, I was part of those statistics but now I have a plan that is yielding good results.

Here is how I am preparing for retirement.

4. Prepare a Will

Do you have a will? If not, you are among 50% of Americans with children who have neglected this important step.

So what are some of your reasons for not dealing with this issue? You might think it is costly (it is not), or complex (it is not), or that simply you don’t have anything to leave to anyone so you don’t need a will (oh but you do).

Or you might just not want to think about your own mortality.

However, the reality is that we will all face death and the sooner you face that fact, the better off you will be.

So here are the 3 Reasons you should prepare a will:

  1. Because it puts you in control:
    • If you die without a will, the state takes over deciding what happens with your property.
    • The state already has too much say in what happens in our private lives.
    • There is no wisdom in leaving the disposition of your assets to the government.
  2. Because it is simple and cost effective:
    • You don’t need a high priced estate lawyer to do this. For most of us it is really a simple process.
    • Personally I used an online service that provided my wife and I with the required state specific forms for our wills.
    • It just took a few hours and less than $50 and we are able to put our last wishes on paper.
  3. Because it shows love for your family:
    • Imagine if something were to happen to you. In the midst of the grief and sorrow of losing you, your family also has to deal with the legal ramifications of what to do with your assets.
    • Don’t leave a problem behind. Love your family to the end by taking care of your will preparation today.

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5. Get on a Budget

I have always told you, the budget is the key to your financial success.

If you can’t control your money, you can’t build savings, you can’t pay-off debt, you can’t plan for the future.

Make 2015 your best financial year by starting to get control of your money today!!!

What other steps could you take this month to help you make progress with your money in 2015?

Redeem the Time: Make 2013 Your Best Financial Year Ever

Sand Glass (Redeem the Time)Subscribe to future posts from Figueroa Financial by e-mail

Can you believe half of 2013 is gone already? Last week at work I had my midyear assessment, and it was a good time to review how my team and I had performed against our objectives for this year. In summary, we are doing well but we can do better.

In addition to my work objectives, I had set personal goals, and goals for Figueroa Financial for 2013.

This past weekend I had the blessing of a long break thanks to the 4th of July Holiday, so I took the opportunity to evaluate how I am doing against those goals. In some cases, I met or exceeded my goals, and in some cases I came up short.

But the important thing is that I took time to stop, do the review, and see how things are going. I know where I am and I know what I need to do for the rest of this year.

You can follow the same process with your money. Did you set some goals back in January for your finances? How are you doing?

I don’t want you to get discouraged if you are not doing as well as you wanted. You still have half of 2013 in front of you. You can still redeem the time and make 2013 the best year for your finances. It’s time to review, reflect, and reset the plan for your money.

Review

What goals have you achieved this year? How are you doing with your monthly budget? Have you completed your beginner’s emergency fund? Did you finish paying some of the debts on your debt snowball?

As you review your results, take a moment to celebrate. Every step you take in the direction of financial wellness is a step in the right direction.

Every victory counts in your battle to get control of your money, so don’t forget to celebrate when you win!

Reflect

As you review your results, there is the danger that you might get discouraged if you are not careful. To avoid that, I want you to do 2 things.

First, I want you to first think about how far you have come since you began. If you have made changes to the way you handle money, you are making progress.  Don’t forget that you are not where you used to be.

Second, try to focus on why you are working hard to get control of your money. Maybe you were tired of living paycheck to paycheck. Maybe you got sick and tired of carrying the debt burden. Perhaps you wanted to change the legacy for your family and leave a great inheritance to your children and their children.

Remembering the “why” will empower you and keep you going even when things get difficult.

Reset

As you look at your results, you might need to reset your strategy. Think about what worked well for you and think about what could have gone better.

Be honest and remember that this is a process, and that implies that it takes time to get it under control

Are there any categories where you can reduce your spending? For example:

  • If you had trouble with certain categories like groceries or restaurants, you might want to start using a cash envelope.
  • Could you get a better cell phone or internet service deal?
  • How about exploring options for reducing your insurance expenses?
  • Or could you reduce your recreation/entertainment expenses by choosing cheaper alternatives?

And what could you do to increase your income? For instance:

  • Is it time to pick up more hours at work?
  • Could you pick up a part time job or do some freelance work?

Your goal is to improve your cash flow by reducing your expenses and increasing your income. Every little improvement can help you to balance your budget and give you great traction.

“All we have to decide is what to do with the time that is given to us.”
J. R. R. Tolkien (The Fellowship of the Ring)

Please leave me a comment and let me know about your financial plans for the last 6 months of 2013.

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Call the A-Team to Rescue Your Finances

The A-Team

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Remember the A-Team? That was an American TV series from the 1980s about a fictional group of ex–United States Army Special Forces personnel who worked as soldiers of fortune, while on the run from the Army after being branded as war criminals for a “crime they didn’t commit”.

I don’t know about you, but the series was “must-see TV” for me. During that time I was in college in Puerto Rico sharing a house with 4 other guys.

“The A-Team” aired every Wednesday at 6:00 PM and we all worked our schedules to be at home and have dinner ready in time to see Hannibal, Face, B.A. Baracus, and Murdoch come to the aid and rescue of those who could not rescue themselves.

I believe we all could use the help from the “A-Team” with the management of our finances. Here is why you and I need these 4 commandos on our side to rescue our finances:

The Face: Templeton “Faceman” Peck

The “Faceman” (or “Face”) was the smooth-talking con man who served as the team’s appropriator of vehicles and other useful items, as well as the team’s second-in-command. He could basically pass himself as virtually anyone.

In order to change the destiny of your finances, you might need to change who you are in some aspects. For example, you might consider yourself useless and easily bored with the details of finances. Reviewing a budget spreadsheet is a good remedy for your insomnia.

But in order to win with money you need to get involved with how you plan to spend it. You don’t have to become a financial wizard but you need at least to know the basics.

Or you might be the free-spender who lives for the pleasure of today and worries about the consequences later. You may have to change into a person which actually is patient and saves to buy what they want. That person can actually distinguish between “wants” and “needs”.

Will you decide to change and adapt your “face” for the good of your family?

The Muscle: B.A. Baracus

B.A. was the team’s strong man and mechanic. Whenever the team ran into some tough customers, B.A. led the fight. When something big needed to be pushed or a vehicle needed to be rigged, Baracus was your man.

In your finances, the muscle comes from having a working monthly budget. Your budget provides your income the strength it needs so you can meet your obligations, save money, and get out of debt. When your budget works, you learn to live on less than you make so your money can do more for you and your family.

Are you ready to apply some muscle to your money?

The Crazy: H.M. (“Howling Mad”) Murdock

Murdock was the team’s pilot and also the resident crazy member of the team. Most of the time, they had to extract him from a mental institution before they could complete their next mission. The team always could use Murdock to try some of the most impossible stunts. He was a great pilot, but crazy enough to try the unorthodox.

Your finances need a little bit of a crazy touch. You could go crazy and have a garage sale this weekend to sell anything that’s really not needed to finish your beginner’s emergency fund. You could become obsessed with e-Bay and Craigslist and sell everything but the children in order to get out of debt.

Or you could go even more insane and cut the cable bill or eating out expenses until you get on a firm foundation with your money. It might sound crazy to you and your friends but guess what: you don’t need credit cards to survive.

How crazy are you willing to get in order to win with money?

The Mastermind: John “Hannibal” Smith

The leader of the team was Lieutenant Colonel/Colonel “Hannibal” Smith. Regardless of the situation, Hannibal had a plan and he always had the confidence that it was going to work. His team did not always understand all the pieces of the plan but they trusted him. His catch phrase was: “I love it when a plan comes together”.

You need to have a plan for your money that will bring financial wellness to you and your family. How are going to get out of debt? When could we buy a house? How are we going to pay for college? How are going to live in our retirement years? What kind of insurance do we need? What’s our estate plan?

Your plan has to be adjusted to your personal needs and reality. But you do need a plan or otherwise you won’t be able to achieve your goals. Work with your spouse to develop your plan. If you are single, seek some wise counsel to layout your goals and how you will achieve them.

Start putting your plan together today so you can quote Hannibal and love when it all comes together.

Which member of the “A-Team” do you need the most on your finances today? Leave a comment and let me know!

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5 Financial Products That I Avoid

No ThanksTeaching and coaching involve sharing knowledge on how to do certain things. In the case of personal finances I usually focus on the  method for doing something with your money like how to do a budget or how to get out of debt.

But it is also important to share what not to do with your money so you can keep more of it! So today’s coaching post is devoted to what products to avoid in your financial plan.

Here are 5 Financial Products That I Avoid:

1. The Single Stock

I believe investing in the market it’s a great idea. Once you have your financial household in good shape, you should be investing for long term goals such as retirement/college savings and also to build wealth. However, I do stay away from the single stock purchase and focus instead on diversification by investing in mutual funds.

A mutual fund is an investment where thousands of people combine their money to purchase a wide diversity of stocks, bonds or other types of investment. I invest in 4 types of stock mutual funds, so that’s diversification on top of diversification. If all your money is one single stock or only in one type of investment fund, your risk is too high.

2. The 30-year Mortgage

30 years has been the standard length for a mortgage loan. There is not much rhyme or reason to it except that someone a long time ago decided it was the right length of time. However, you can save a lot of interest by using a 15-year or 20-year mortgage instead. With interest rates as low as they are today, the difference in the monthly payment is not that significant but the savings in interest are.

We chose a 15-year mortgage for our home and we are paying extra so we are planning to pay it off early.

3. Extended Warranties

When you purchase a home appliance or a piece of home electronics, you will be met at the register with the offer for an extended warranty for 2-3 years on top of the standard warranty. The sales pitch is that the warranty will cover the costs of replacing or fixing if the item breaks. However, you are better off using your emergency fund to cover the replacement costs in the eventuality that something does break down. There is no need to pay extra for the “protection”.

And frankly, if the equipment is that fragile that it could break inside of 2-3 years, maybe you should be looking at a different brand.

4. The Home Warranty

Here the sales pitch is to address a “major” item such as the furnace or a major plumbing/electrical repair. When we purchased our home about 2 years ago, the previous owners had an existing home warranty so it came with the house. We tried to use it one time and on top of the annual fee of about $500, we had to a pay a service call fee of $75 for someone (of their choosing) to just come and look at the problem.

We canceled the home warranty the next year because it was not worth it. Instead plan for home repairs with with an emergency fund.

5. Whole Life/Universal Insurance

If you have anyone depending on your income, you need to make sure they will be taken care of in case something happens to you. However, the whole life/universal type of policy it’s too expensive.

Your best value is to have 20 to 30 year Term Life insurance. You can get better coverage for less money. The monthly savings can be used for paying down on debt, savings, or investing.

What do you think? Have you used any of these products? What has been your experience? Are there any other financial products you avoid?

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Spring Training For Your Finances

Spring Training for your FinancesIf you are a fan of baseball like me, you know that the sport is in the midst of the Spring Training season. This is where the teams go to warm locations like Arizona and Florida and start preparing for the season that will start in April.

It’s a time full of hope because positions are there to be won by players and every team starts with a new slate. It’s a time where players get down and focus on the fundamentals of the game and on finding the way to start the season in the best way possible.

As I have been monitoring the progress of both the Texas Rangers and the Houston Astros, I started to think that as the teams work on the fundamentals of the game, there are fundamental lessons from baseball’s Spring Training that we can apply to our finances. Let me share these fundamental lessons of the financial game with you:

Communication

Typically, pitchers and catchers report to Spring Training first, about a week before the rest of the players. This is because they need to work on their relationship, understand how each likes to approach a particular hitter, or game situation, and work on their signs. Pitchers & catchers are called battery partners as they control the flow of the game.

In your finances if you are married, communication with your spouse is key. You need to discuss money openly and objectively. You need to work together or otherwise you will be working against each other. You and your spouse need to control the flow of your money. And if you are single, you need a partner/friend/mentor to be your battery partner and walk with you and help you control the flow of your money.

The Double-Play (DP)

The classic form of the DP is that the shortstop and 2nd baseman combine to take two opposing players out. I think in order to win with your finances you need the classic DP: Get on a budget and save a beginner’s emergency fund ($1,000).

With a working budget you will control the flow of your money and will increase the strength of your income. With a beginner’s emergency fund, you can absorb the impact that life can bring to your life on a regular basis without going further into debt.

The Sacrifice Bunt

The goal of this play is to advance a runner to a more advantageous scoring position. The hitter does not get credit for the at-bat or a hit. With your finances, the sacrifice bunt may involve cutting some fun stuff out of your budget temporarily (like eating out, cafe lattes, or vacations) while you reach stable ground. It may also involve working extra hours or taking a 2nd part-time job. The goal is to advance the goals of your team, meaning your household.

Situational Hitting

The goal here is to train players and team to adjust their offense to the needs of the game. The hitter will adjust the approach of his at-bat based on what the team needs. You also need a plan and an adjustment to your approach if you are in debt.

It means you need a plan to get out of debt and you need the intensity and determination to get out of debt.

Covering Your Bases

Just like teams work on situational hitting during Spring Training, teams also work on their defense for different game situations. Players need to practice where to make a throw or which base to cover. You also need to understand and plan to cover your bases so you can defend your financial well being.

Here are the 4 of the financial bases you need to cover: insurance needs, retirement savings, college savings, and preparing your will. Make sure your bases are all covered!

I hope these fundamental plays are helpful to you. You may have identified other fundamental plays in your own journey towards financial wellness and I would love to hear what you think. I will leave you with a phrase of encouragement for wherever you are  on your journey. It comes from the great baseball philosopher, Yogi Berra:

It ain’t over ’til it’s over

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