Estate Planning Without an “Estate”
When the words “estate planning” come to mind, many people think of billionaires such as Bill Gates or Mitt Romney. These wealthy Americans certainly do have an estate and a very complex estate plan. However, anyone with a few dollars in the bank or a life insurance policy technically have an estate. Your estate is anything you’ve accumulated over your lifetime. Therefore, it’s important to have an estate plan even if you don’t feel like you have an “estate.” Below are a few tips to consider, including some information that may surprise you:
Hopefully this list of popular estate planning documents has been helpful. Please be sure to speak with a qualified estate attorney before making any changes to your estate plan. This can be a very complicated topic, so professional guidance is important.
By Vena Stevens, Gateway EITC Community Coalition
Date: January 9, 2015
Tax season is quickly approaching. Knowing a few simple facts about tax preparation and filing will help you avoid mistakes and may even save you money.
There are several options for preparing and filing your federal income tax return. You can prepare and file your own tax return. This is a good option for someone who has a simple return. Those making less than $60,000 for the 2014 tax year can even do this for free online through www.MyFreeTaxes.org and the IRS Free File website.
The majority of Americans will have their returns done for them. There are some things that are important to know before deciding on a tax preparer. There is currently no U.S. regulation or minimum educational requirement for tax preparers. Only four states have regulations; Missouri is not one of them. According to the IRS, about 60% of tax preparers operate without any oversight or educational requirements.
Options for having your taxes prepared:
Tips for Choosing a Tax Preparer:
Other Dos and Don’ts:
By Thomas Nitzche, CFEd, ClearPoint Credit Counseling Solutions
Date: March 20, 2014
Winter doesn’t want to leave, but many of you may be ready to start your spring cleaning. While images of mops, broomsticks, and vacuums traditionally come to mind, cleaning up your credit is an important part of maintaining your household. Start off your spring credit cleaning by getting a copy of your credit report through a reputable site that offers free credit reports like www.annualcreditreport.com.
Your credit report is an extremely important factor in becoming financially secure. There are many reasons why every consumer should pull their credit report yearly. The main reason is that you need to know exactly what is being recorded on your credit report by your creditors, and you need to make sure that information is reported correctly.
Credit reports can affect your ability to get a job, purchase a new car or home, and can also influence how much interest you will pay on your credit cards and other debts.
Many companies now pull credit reports for job applicants. They may require your score to be above a certain number or that you are current on all of your debt obligations. You need to make sure your credit report is positive when applying for new career opportunities.
Potential lenders for new car or home loans will pull your credit report. It is part of their due diligence, and in most cases is required. All lenders have specific guidelines for who will and will not qualify for a loan. The cost of the loan will also be determined by your credit report and credit score.
When applying for new credit cards, the prospective creditor will pull your credit report. The credit line you receive and the interest rate you will pay is determined by your credit report and credit score. In most cases, lenders/creditors also take into consideration your income and assets.
Often, inaccuracies are reported to the credit bureaus and these can have significant effects on your credit rating. It is essential that you review your reports from the three major credit bureaus at least once per year to maintain good credit. You don’t want an error to be holding down your credit score and negatively affecting the way you are viewed by creditors.
Once you have your credit report in hand, the true cleaning can begin. First, review everything to be sure there aren’t any accounts you were unaware of. Then check to see if there are any negative factors being reported that you believe may be inaccurate. Should you find any information that you believe is incorrect, make sure to file a dispute in the dispute area of your credit report (disputes are generally resolved within 30-45 days). Next, take a look over the accounts you have and make a plan to improve your score through taking care of old debts, making timely consistent payments, catching up on any past due amounts, reducing balances owed, and maintaining lower balances on your accounts over time.
By Patrice G. Dollar, Lincoln University Cooperative Extension
Date: February 14, 2014
February is the month of romance. However, finances and money are not romantic. It is not the stuff of which love stories are made. Talking about money, before you tie the knot is pivotally important.
There is no way to avoid the discussion of money issues. What should you discuss? There are day to day issues such as who will pay the bills and whether or not you should merge checking and/or saving accounts. If you keep your account separate, whose money will pay what? How much should you save? What are your goals? What if your financial situation changes in the future?
If you have been married before and are becoming a blended family, the financial discussions are more complex. Deciding whether to keep finances separate or merge them, you need to consider how that decision will affect your respective children. Are you willing to help your new spouse or partner put his or her kids through college? Do you need a prenuptial agreement? Have you written wills? What will happen if you die first? Will the surviving spouse leave everything to his or her kids? There can be some sticky issues for a second marriage.
There are various models for handling income. The Equal share model is where equal amounts are put into a bank account to cover basic household expenses. Remainder salaries are spent or saved by each partner. Problems can arise if one person earns considerably more than the other partner. In which case, the Proportional share model may be more appropriate. Each partner contributes a percentage of his or her income to the joint accounts for savings and living expenses. A couple can Pool their resources, combining all of their income. However, in pooling resources, each person should have equal say as to how the money should be spent.
Calculating your cash flow and net worth should be a priority for both individuals. Your cash flow should reflect how much income you receive each month and how much is spent. It tracks your day to day expenses.
The net worth statement is a list of what you own and what you owe, a financial snapshot of your situation. Each individual should complete both a net worth statement and a cash flow statement. The statements can provide key indicators of how your prospective partner handles money.
Does your partner spend money lavishly on dinner, expensive gifts or is he or she a tightwad? Think about how your partner spends money. Are you a saver, while your partner has several credit cards with high balances? No one system will function for everyone because individual needs, values, interests, goals, skills, and personalities differ. Develop a system together; do not be afraid to revise or adjust a system that does not work.
Quote: “Money issues resolved earlier in a relationship are fewer headaches later.”
By: Suzanne Gellman, University of Missouri Extension
Date: January 1, 2014
The New Year is a great time to take charge and re-evaluate finances. Part of being Money Smart is looking at your financial priorities and setting or reviewing your financial goals. If you are like most people, life changes and so some goals may no longer apply, or others need to be adjusted based on your current situation.
Visualize yourself achieving your goals. Have you considered creating a vision board? This is a board of pictures of the things you want to have in your life – what do you want to do? What do you want to have? And what do you want to be? All of these questions usually have financial pieces to them that should be part of your financial goals. All you need to get started are some magazines, a scissors, some glue, and a large piece of paper! If you’re artistic – maybe all you need is paper and pencils or paint.
When you put your goals on paper you are more likely to reach them – especially if this includes an action plan. How much are you going to save each week or each paycheck or each month to reach your goals? How are you going to save it?
Find money to save. When was the last time you took a look at how you spend money? Look for ways to reduce or remove a few spending areas here or there over time so you can redirect the money to your financial goals. Challenge yourself to keep track of your spending for 30 days, or at least a few weeks. Review your spending – are there areas where you could set more realistic limits? If there is no extra money to save, can you think of ways to bring in a little extra money to help fund your goals? Do you have a hobby or talent you could use to make some extra money?
Take control of your money by creating a plan. Many people spend without a plan and thus end up living paycheck to paycheck, when in reality, there may be more available to re-direct to financial goals than you think. A spending plan can help you set limits and help balance your spending and saving. Try using cash for a few months as a way to live within any plan you create for yourself; especially for areas where you might tend to overspend (i.e. food, entertainment, clothing).
Make savings a habit. Saving is key to reaching financial goals. The more you can automate your saving, the easier it will be to reach goals. Check with your employer and your bank or credit union to help you figure out how to have money deposited automatically into a special savings account each paycheck (hint: don’t keep it in your checking account).
Pay yourself first! Pay yourself like a bill. Finding a way to move even $10 a week to savings is $500 over a year. Now that is a Money Smart way to start the New Year!