The financial forecast for our economy is not that good due to slower economic growth, tighter credit, falling housing prices and erratic stock market. So here are some ways to feel more secure about your money:
1. Stay Job Ready — You’re ability to earn an income is your biggest single asset. Bring your resume up to date. Consider classes to improve your skills. Keep in touch with professional contacts and make new ones by attending business events or working as a volunteer. Find out what your resources are if you are laid off. For example: Are you entitled to severance pay or unemployment insurance and if so, what size and duration of benefits. You can go to www.workforcesecurity.doleta.gov for links to state unemployment agencies to find out your rights. There may not be much for you, since you are incorporated and did not pay yourself a wage and therefore, did not contribute to the system, but I would check anyway (maybe some past contributions or something we don’t know about?) Stay healthy, it is much less expensive than being sick. Make sure everyone in the family gets their medical and dental check ups.
2. Check Your Mortgage — If you have an ARM ask your lender when your rate is scheduled to reset and what the ball park estimate of new rate and payment will be. If you can’t afford it, don’t wait until the loan resets-address the problem now. The sooner you act the greater your options. If your credit has improved since purchasing the home, you should be looking for another loan. You may be able to get a new fixed-rate mortgage lower than your ARM’s reset rate. You may be able to refinance, contact your lender and explain your situation and ask if they can modify your loan. Document every contact with the lender and keep the paperwork. If you end up in bankruptcy or a legal action, it helps to show you were proactive and responsible. You can contact the Homeownership Preservation Foundation, a no-fee, HUD-approved credit-counseling service.
3. Prepare for an Emergency — If you don’t have a home equity line of credit, you may want to set one up for emergency. You can borrow up to 90 percent of your home’s value; if you have a 70 percent mortgage you can get a line for 10 to 20 percent.
4. Tighten Your Belt — Cut expenses even if you not in danger of losing your job and use the extra money to pay down credit-card debt. Eat out once a week, instead of three times and buy a slow-cooker pot and in a year you probably have a 1000 percent return on your investment. If you have credit card debt, check your rate online to make sure competitive. If not, ask your lender to lower the rate. If you bought your house in 2005 or 2006 and the values have plummeted, petition your county tax board to reduce your property taxes. If you can show that the house is assessed at more than its current value you may reduce your tax bill.
5. Review Your Investments — Money you need in the next few years, should be in CD’s or money-market fund. It should not be in stocks, bonds or a no-interest checking account. Long-term investments should be well-diversified. Your retirement accounts should include at least four types of mutual funds: big company US stocks, small company US stock, international stocks and high-quality bonds. Don’t keep more than 10 percent of your investment in the stock of your company or industry this is risky.
For more information, please contact Theresa M. Stewart, CPA, An Accountancy Corporation at 661-775-9534.